IRS Issues New Guidance on General Public Use Rules – Revenue Procedure 2019-17

The IRS has issued Revenue Procedure 2019-17, which allows projects with tax-exempt bonds issued on or after April 3, 2019, to apply the general public use rules for residential rental housing in the same manner the rules are applied for Low-Income Housing Tax Credit (LIHTC) projects under Section 42 of the Internal Revenue Code. Under §42(g)(9) a project does not violate the general public use requirement as a result of specified occupancy restrictions or preferences (e.g., a housing preference for military veterans).


Under §1.103-8(a)(2) of the Income Tax Regulations, to qualify for private activity tax-exempt bonds, a facility must serve or be available on a regular basis for general public use. For example, an apartment building for which employees of an adjacent factory are given preference over other potential tenants would not be considered available to the general public.

§1.42-9(a) provides that a residential rental unit is for use by the general public if the unit is rented in a manner consistent with housing policy governing non-discrimination, based on HUD rules. One example of a unit that is not available to the general public is one that is provided only for members of a social organization or provided by an employer for its employees. Such units are not considered low-income units.

§42(g)(9) provides that a project does not fail the general public use test solely because of occupancy restrictions or preferences that favor tenants (A) with special needs; (B) who are members of a specified group under a Federal or State program or policy that supports housing for such a group; or (C) who are involved in artistic or literary activities. Another example are Federal and State programs that support housing for military veterans.

§142(d) does not contain a provision similar to §42(g)(9). Tax-exempt bonds and LIHTCs are often used together to finance residential rental projects. The purpose of this Revenue Procedure is to align the Section 142 general public use requirements with those of Section 42 and applies only to bonds that finance residential rental housing and no other exempt facilities.


A qualified residential rental project does not fail to meet the general public use requirement solely because of occupancy restrictions or preferences that favor tenants described in §42(g)(9). This procedure will apply to tax-exempt projects with or without the LIHTC.