Notice 2013-39, Temporary Shelter for Individuals Displaced by Severe Storms and Tornados in Oklahoma

pursuant to § 1391(d)(1)(A)(i), the designation of that empowerment zone ends on
December 31, 2013.
IV. DRAFTING INFORMATION
The principal author of this notice
is Winston H. Douglas of the Office of
Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this notice contact Mr. Douglas
on (202) 622–4930 (not a toll-free call).

Temporary Shelter for
Individuals Displaced by
Severe Storms and Tornadoes
in Oklahoma
Notice 2013–39
The Internal Revenue Service is
suspending certain requirements under
§ 142(d) of the Internal Revenue Code
for qualified residential rental projects financed with exempt facility bonds under
§ 142 to provide emergency housing relief needed as a result of the devastation
caused by severe storms and tornadoes in
Oklahoma that occurred between May 18,
2013, and May 27, 2013 (hereafter, the
Tornadoes).
This Notice provides relief for all qualified residential rental projects described
herein. For those projects that are also
low-income housing tax credit (LIHTC)
projects, this Notice should be read with
Notice 2013–40, I.R.B. 2013–25 (June 17,
2013), which suspends certain low-income
and non-transient requirements under
§ 42 to allow low-income housing credit
projects to provide emergency housing
needed because of the Tornadoes.

to housing caused by the Tornadoes, the
Service has determined that issuers may
approve the use of qualified residential
rental projects described in § 142(d) to
temporarily house displaced individuals,
as defined below, regardless of their income, in accordance with this Notice. The
Service has determined that the projects to
which this approval may be given can be
located in any State, regardless of whether
a major disaster declaration with Individual Assistance has been issued for that
State.
Consistent with Notice 2013–40, the
term “displaced individual” means, for
purposes of this Notice, an individual who
resided in a jurisdiction designated for
Individual Assistance and who has been
displaced because his or her residence was
destroyed or damaged as a result of the
devastation caused by the Tornadoes.
SECTION 1. SUSPENSION OF
INCOME LIMITATIONS
The Service has determined that it is
appropriate to temporarily suspend certain income limitation requirements under
§ 142(d) that apply to qualified residential
rental projects financed with tax-exempt
bonds issued by a qualified issuer under
§ 103 (Issuer). The suspension, described
in Section 3 below, is available to both
qualified residential rental projects under
§ 142(d) that are not subject to any LIHTC-related requirements (Bond Projects)
and to qualified residential rental projects
under § 142(d) that are also subject to LIHTC-related requirements (Bond/LIHTC
Projects). For purposes of this Notice,
the term “Project” refers to either a Bond
Project or a Bond/LIHTC Project.
SECTION 2. GENERAL
REQUIREMENTS

BACKGROUND
On May 20, 2013, the President issued
a major disaster declaration for the State
of Oklahoma because of the devastation
caused by the Tornadoes. The President
issued the declaration under the Robert T.
Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121 et seq.
Subsequently, the Federal Emergency
Management Agency (FEMA) designated
jurisdictions in Oklahoma as eligible for
Individual Assistance (as FEMA uses that
term). Because of the widespread damage

June 17, 2013

.01 Issuer Approval for Relief. If an Issuer that issued exempt facility bonds for
a Project desires to allow the use of the
Project to temporarily house displaced individuals, the Issuer must approve that use
and must determine an appropriate period
for the temporary housing, not to extend
beyond May 31, 2014 (Temporary Housing Period). If a Bond/LIHTC Project
subject to both Notice 2013–40 and this
Notice receives approval, for purposes of
§ 42, for a temporary housing period and
for the suspension of income limitations

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from a State housing agency (as contemplated in Section IV(2) of Notice 2013–40)
and that agency is not the Issuer, then
the income limitations under § 142(d) for
that Bond/LIHTC Project are suspended
only if the project also receives the Issuer’s consent for a suspension. An Issuer
that chooses to provide that consent must
adopt for purposes of § 142(d) the same
temporary housing period that the agency
adopted for purposes of § 42.
.02 Protection of Tenants. Existing tenants in a Project whose income is at or below an applicable income limitation under
§ 142(d) cannot be evicted or have their
tenancy terminated as a result of efforts to
provide temporary housing for displaced
individuals.
.03 Certification and Recordkeeping
Requirements. The Project operator must
comply with the certification and recordkeeping requirements in Section 4 of this
Notice. For certification and recordkeeping requirements under § 42, see Notice
2013–40.
.04 Rent Restrictions. To the extent
such rent restrictions are applicable, rents
for the low-income units that house displaced individuals must not exceed the
lesser of—
(1) the maximum gross rent for that unit
under § 142(d)(4)(B); or
(2) the maximum gross rent for that unit
under § 42(g)(2).
.05 Project Must Meet All Remaining
Requirements. Except as expressly provided in this Notice, a Project continues
to be subject to all other rules and requirements of § 142(d) and § 103.
SECTION 3. RELIEF FROM SECTION
142 REQUIREMENTS
.01 Qualified Project Period. Only a
unit in a Project occupied by a non-displaced individual counts for purposes of
determining the beginning of the qualified project period under § 142(d)(2)(A).
Thus, only non-displaced individuals
are counted for determining the 1st day
on which 10 percent of the residential
units in a Project are occupied under
§ 142(d)(2)(A). However, occupancy of a
unit by any tenant (whether a displaced individual or a non-displaced individual) in
a Project counts for purposes of determining the end of the qualified project period
under § 142(d)(2)(A)(i). If occupancy by

2013–25 I.R.B.

a displaced individual in a Project causes
any termination of assistance with respect
to the Project under section 8 of the United
States Housing Act of 1937, then that termination is disregarded for determining
when the qualified project period ends
under § 142(d)(2)(A)(iii).
.02 Satisfaction of the Non-Transient
Use Requirement. The occupancy of
a unit in a Project by a displaced individual during the Temporary Housing
Period is treated as satisfying the non-transient use requirement applicable to qualified residential rental projects described
in § 142(d). See § 1.103–8(b)(4); see
also Notice 2013–40 for suspension of
the non-transient use requirement under
§ 42(i)(3)(B)(i).
.03 Income Qualification of Units in
Bond Projects during Temporary Housing
Period. A unit in a Bond Project occupied by a displaced individual during the
Temporary Housing Period retains the income status it had immediately before that
occupancy, regardless of whether the unit
was a market-rate unit, a unit occupied by
a tenant who met an applicable income
limit, a designated low-income unit, or a
never previously occupied unit. See Rev.
Proc. 2004–39, 2004–2 C.B. 49 (treating never previously occupied units as unavailable). This means, for example, that
if a unit in a Bond Project had been designated as a low-income unit or rented to an
individual whose income was at or below
an applicable income limit or was a market-rate unit or an unavailable unit, then
the unit remains as such while occupied by
a displaced individual during the Temporary Housing Period regardless of the occupancy by, or income of, the displaced
individual. Thus, the fact that a unit becomes occupied by a displaced individual
does not affect compliance with the 20–50
test or 40–60 test of § 142(d)(1)(A) and (B)
(or the 25–60 test under the special rule in
§ 142(d)(6)).
Under § 142(d)(3)(B), if the income of
a low-income resident of a Project rises
above a specified percentage of the applicable income limit, then, for that resident’s income to continue to be treated as
not exceeding the applicable income limit,
the next residential unit meeting certain
criteria to become available in the same
Project must be occupied by a new resident whose income does not exceed the
applicable income limit (the next avail-

2013–25 I.R.B.

able unit rule). For purposes of determining compliance with the next available
unit rule, an operator of a Bond Project
may disregard the new occupancy of units
during the Temporary Housing Period by
displaced individuals, and apply the rule
solely based on new occupancy by persons
who are not displaced individuals. The operator may, however, take into account a
displaced individual’s occupancy for purposes of § 142(d)(3)(B) if the operator obtains sufficient evidence that the displaced
individual’s income does not exceed the
applicable income limit.
.04 Income Qualifications of Units in
Bond/LIHTC Projects During the Temporary Housing Period. The income status of
a unit and the income qualification of the
occupant of a unit for purposes of § 142(d)
in a Bond/LIHTC Project occupied by a
displaced individual during the Temporary
Housing Period shall be treated the same
as they are for purposes of § 42 under Notice 2013–40. For purposes of determining compliance with the next available unit
rule, an operator of a Bond/LIHTC Project
may disregard the new occupancy of units
during the Temporary Housing Period by
displaced individuals, and apply the rule
solely based on new occupancy by persons
who are not displaced individuals. The operator may, however, take into account a
displaced individual’s occupancy for purposes of § 142(d)(3)(B) if the operator obtains sufficient evidence that the displaced
individual’s income does not exceed the
applicable income limit.
.05 Income Qualifications when Temporary Housing Period Ends. After the end
of the Temporary Housing Period, the status as a displaced individual of an occupant remaining in a unit in a Project will
be disregarded and the status of the unit occupied by such individual and the income
of such individual will be re-evaluated as
though the formerly displaced individual
commenced occupancy of the unit on the
day immediately following the end of the
Temporary Housing Period. Thus, if the
displaced individual remains in the unit,
the unit will be treated as occupied for all
purposes of § 142(d) and the income of the
displaced individual will be used for determining compliance with the requirements
of § 142(d). If non-compliance relates to
continued occupancy of the unit after the
Temporary Housing Period by an occupant
who was a displaced individual during the

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Temporary Housing Period, a 60-day period is allowed for correction.
SECTION 4. CERTIFICATIONS AND
RECORDKEEPING
In addition to any information and certifications required by § 142(d)(7), Project
operators must maintain and certify certain
information concerning each displaced individual temporarily housed in the Project.
The records must contain the following information: the name of the displaced individual, the address of the damaged residence of the displaced individual, the displaced individual’s social security number,
and a statement signed under penalties of
perjury by the displaced individual that,
because of damage to the individual’s residence in a jurisdiction designated for Individual Assistance by FEMA as a result of
the devastation caused by the Tornadoes,
the individual requires temporary housing.
In addition, the Project operator must keep
accurate records of the Issuer’s approval of
the Project’s use for displaced individuals
and the approved Temporary Housing Period and the dates during which displaced
individuals occupied units in the Projects.
The recordkeeping described under this
paragraph must be included as part of the
books and records of the Project operator and also must be maintained in a manner that is consistent with any compliance
monitoring process imposed by § 142(d).
SECTION 5. EFFECTIVE DATE
This Notice is effective May 20, 2013.
SECTION 6. PAPERWORK
REDUCTION ACT
The collection of information contained
in this Notice has been reviewed and approved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–2244.
A Federal agency may not conduct or
sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays
a valid OMB control number.
The collection of information in this
Notice is in the section entitled “Section
4: CERTIFICATIONS AND RECORDKEEPING.” This information is required

June 17, 2013

to enable the Service to verify whether individuals are displaced as a result of the
devastation caused by the Tornadoes and
thus warrant temporary housing in vacant
units in certain Projects. The collection of
information is required to obtain a benefit.
The likely respondents are individuals and
businesses.
The estimated total annual recordkeeping burden is 25 hours.
The estimated annual burden per
recordkeeper is approximately 30 minutes.
The estimated number of recordkeepers is
50.
Books or records relating to a collection
of information must be retained as long
as their contents may become material to
the administration of the internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by section 6103.
SECTION 7. DRAFTING
INFORMATION
The principal authors of this notice are
Timothy L. Jones and Spence Hanemann
of the Office of Associate Chief Counsel
(Financial Institutions & Products). For
further information regarding this notice,
contact Mr. Hanemann at (202) 622–3980
(not a toll-free call).

Low-Income Housing Credit
Disaster Relief for Oklahoma
Severe Storms and Tornadoes
Notice 2013–40
The Internal Revenue Service is suspending certain requirements under § 42
of the Internal Revenue Code for low-income housing credit projects to provide
emergency housing relief needed as a result of the devastation caused by severe
storms and tornadoes in the State of Oklahoma that occurred between May 18,
2013, and May 27, 2013 (hereafter, the
Tornadoes). This relief is being granted
pursuant to the Service’s authority under
§ 42(n) and § 1.42–13(a) of the Income
Tax Regulations. This notice should be
read with Notice 2013–39, I.R.B. 2013–25
(June 17, 2013), which suspends certain
requirements under § 142(d) for qualified
residential rental projects financed with

June 17, 2013

exempt facility bonds under § 142 to provide emergency housing relief due to the
Tornadoes.
BACKGROUND
On May 20, 2013, the President issued a major disaster declaration for the
State of Oklahoma because of the devastation caused by the Tornadoes. The
President issued the declaration under the
Robert T. Stafford Disaster Relief and
Emergency Assistance Act, 42 U.S.C.
5121 et seq. Subsequently, the Federal
Emergency Management Agency (FEMA)
designated jurisdictions for Individual
Assistance. Because of the damage to
housing caused by the Tornadoes, the
Service has determined that state housing
agencies (Agencies) may provide approval
to project owners in their respective states
to provide temporary emergency housing
for displaced individuals in accordance
with this notice. For purposes of this
notice, the term “displaced individual”
means an individual who resided in a
jurisdiction designated for Individual
Assistance and who has been displaced
because his or her residence was destroyed
or damaged as a result of the Tornadoes.
The Service has also determined that
the projects to which this approval may
be given may be located in any state,
regardless of whether a major disaster
declaration with Individual Assistance has
been issued for that state.
I. SUSPENSION OF INCOME
LIMITATIONS
The Service has determined that it is
appropriate to temporarily suspend certain
income limitation requirements under § 42
for certain qualified low-income housing
projects. The suspension will apply to
low-income housing projects which are
approved by the Agency with jurisdiction
over the project (the applicable Agency)
and in which vacant units are rented to
displaced individuals. The applicable
Agency will determine the appropriate period of temporary housing for each project,
not to extend beyond May 31, 2014 (temporary housing period).

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II. STATUS OF UNITS
A. Units in the first year of the credit
period
A displaced individual temporarily
occupying a unit during the first year of
the credit period under § 42(f)(1) will be
deemed a qualified low-income tenant
for purposes of determining the project’s
qualified basis under § 42(c)(1), and for
meeting the project’s 20–50 test or 40–60
test as elected by the project owner under
§ 42(g)(1). After the end of the temporary
housing period established by the applicable Agency, a displaced individual will no
longer be deemed a qualified low-income
tenant.
B. Vacant units after the first year of the
credit period
During the temporary housing period
established by the applicable Agency,
the status of a vacant unit (that is, market-rate or low-income for purposes of
§ 42 or never previously occupied) after the first year of the credit period that
becomes temporarily occupied by a displaced individual remains the same as
the unit’s status before the displaced individual moves in. Displaced individuals
temporarily occupying vacant units will
not be treated as low-income tenants under § 42(i)(3)(A)(ii). However, even if it
houses a displaced individual, a low-income or market rate unit that was vacant
before the effective date of this notice will
continue to be treated as a vacant low-income or market rate unit. Similarly, a
unit that was never previously occupied
before the effective date of this notice will
continue to be treated as a unit that has
never been previously occupied even if
it houses a displaced individual. Thus,
the fact that a vacant unit becomes occupied by a displaced individual will not
affect the building’s applicable fraction
under § 42(c)(1)(B) for purposes of determining the building’s qualified basis,
nor will it affect the 20–50 test or 40–60
test of § 42(g)(1). If the income of occupants in low-income units exceeds 140
percent of the applicable income limitation, the temporary occupancy of a unit
by a displaced individual will not cause
application of the available unit rule under
§ 42(g)(2)(D)(ii). In addition, the project

2013–25 I.R.B.