LIHTC Fixed Rate Legislation Proposed
On Feb. 26, U.S. Representatives Pat Tiberi (R-OH) and Richard Neal (D-MA) introduced a bill that would establish a permanent minimum rate for both 9% and 4% low-income housing tax credits (LIHTCs). The legislation would apply to buildings placed in service after Dec. 31, 2014.
Congress established the 9% minimum LIHTC rate in the Housing and Economic Recovery Act of 2008. It was later extended by the American Taxpayer Relief Act of 2012 before expiring at the end of 2013. The current floating rate has been hovering around 7.5% since then, over a full percentage point lower than the 9% floor. That means a LIHTC project would lose a substantial amount of tax credits, as much as 20% of a project’s total LIHTCs over 10 years, according to those familiar with LIHTCs.
The proposed Tiberi-Neal bill would set the minimum LIHTC rate at 9% for new construction and at 4% for existing properties. Both representatives serve on the tax-writing House Ways and Means Committee so there is hope that they will be able to successfully move this legislation forward. Tiberi, in particular, has long been known as a champion of affordable housing and released the following statement demonstrating his commitment to the issue.
“I’ve seen first-hand the benefits of the low-income housing tax credit during my visits to low-income housing developments in my district. It’s an effective, successful program, and by making a permanent floor on the credit rate, we’re creating certainty for developers to create construction and renovation jobs while increasing housing availability for more low-income families, veterans, seniors, and individuals living with disabilities.”