NMHC continues to call on Congress to expand and enhance the Low-Income Housing Tax Credit (LIHTC) in the next COVID-19 response package. As signers of an ACTION coalition campaign letter, NMHC requests that Congress:
- Enact a minimum 4 percent LIHTC rate. Under current law, the 4 percent credit rate floats and is worth just 3.08 percent due to low interest rates;
- Reduce the 50 percent bond financing threshold for 4 percent LIHTC projects;
- Increase LIHTC allocations by 50 percent over two years beginning in 2021; and
- Enable additional basis boosts for vulnerable projects impacted by COVID-19.
The LIHTC is a public/private partnership that leverages federal dollars with private investment to produce affordable rental housing and stimulate new economic development in many communities.
Under the program, state housing agencies issue credit allocations to developers who then sell the credits to investors. Investors receive a dollar-for-dollar reduction in their federal tax liability over a 10-year period, and developers invest the equity raised to build or acquire apartments. This equity allows apartment firms to operate the properties at below-market rents for qualifying families. LIHTC-financed properties must be kept affordable for at least 30 years.
For more information on NMHC’s advocacy work during the COVID-19 crisis, please visit NMHC’s COVID-19 Hub.
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