A group of House lawmakers on both sides of the aisle is pushing to expand the Low-Income Housing Tax Credit as the supply of affordable housing remains tight.
Rep. Suzan DelBene, D-Washington, and Brad Wenstrup, R-Ohio, led 54 members of Congress in a
Among the proposals is one that would extend the 12.5% LIHTC allocation, which expired at the end of last year. They noted that a pipeline of LIHTC developments is ready to go now, but the program has been "vastly oversubscribed." In 2020, developers asked for nearly 2.5 times as many low-income housing credits as there was available authority for, and any restored or new resources could be deployed immediately by restoring and extending the 12.5% housing credit allocation increase.
They also want to lower a 50% requirement for private activity bond funding to 2% to increase access to the tax credits, which would enable more states to more efficiently use their private activity bond cap and unlock resources for states to complete hundreds of thousands of more shovel-ready developments. Currently, to access the 4% housing credits, 50% of a development has to be funded with private activity bonds. However, nearly half of all states have already reached their federally allocated PAB cap, so without further congressional action, state and local governments and affordable housing developers are limited in their ability to finance new housing stock. The lawmakers contend that provision would lead to 1 million new affordable homes over the next decade, while the other provision would add about 540,000 homes.
"By enacting these two provisions, we can have a huge, positive impact on affordable housing production," said the letter. " According to [Top 100 Firm] Novogradac, these provisions alone are estimated to build or preserve 1.54 million new affordable homes over the next decade."
Affordable housing industry proponents back the move to expand the tax credits. "We applaud Representatives DelBene and Wenstrup for recognizing the immediate and urgent need to take action to address our affordable housing crisis, and for galvanizing bipartisan support around these critical proposals to expand and strengthen the Housing Credit," said Emily Cadik, CEO of the Affordable Housing Tax Credit Coalition, in a statement Monday. "These measures will allow us to immediately ramp up affordable housing production and tackle one of the primary drivers of inflation at a time when rents are skyrocketing."
