Proposed Changes to LIHTC Approved by US House

Last month, the U.S House of Representatives passed a bill that would broaden the scope and accessibility of the low-income housing tax credit (LIHTC), reports Bianca Barragan in an article for Bisnow. Estimates project that the changes to the LIHTC within the Tax Relief for American Families and Workers Act would facilitate the creation of 200,000 new affordable housing units over the next few years.

The bill now goes to the Senate for consideration. If approved as written, it would:

• reinstate a 12.5 percent boost for the 9 percent version of the LIHTC that was implemented in 2018 but expired in 2021;
• allow states to allocate more credits for affordable housing projects, effective for taxable years beginning after Dec. 31, 2022; and
• lower the threshold of 4 percent state and local tax-exempt bond financing a project has to receive for its developer to qualify for the maximum credits to 30 percent instead of the current 50 percent.

With homelessness at record highs and the National Low-Income Housing Coalition finding that no state in the country has an adequate supply of affordable housing that the poorest renters can afford, affordable housing advocates say these proposed changes to the LIHTC are a “big deal,” writes Barragan. However, some say it doesn’t go far enough.

The National Low-Income Housing Coalition told Bisnow that even LIHTC-financed units are too expensive for the lowest income households and this legislation does nothing to address that. And the Federation of American Scientists recently called upon Congress to amend the federal code governing the program to require nonprofit developers to reinvest profits from LIHTC-funded properties into building more affordable units rather than spend it on other priorities not related to housing.