The Obama administration has proposed several significant changes to the low-income housing tax credit (LIHTC) program.
The proposed moves were outlined as part of the analytical perspectives of the fiscal 2014 budget plan.
"We believe the tax credit is an absolutely critical tool for creating and preserving affordable housing," said Shaun Donovan, secretary of the Department of Housing and Urban Development, in a call with reporters.
The ideas include:
- Empowering states to be able to convert some private-activity bond cap into authority to allocate additional LIHTCs;
- Allowing developments to comply with an income-averaging rule under which the income limits for at least 40 percent of the units in a project could average to not greater than 60 percent of area median income (AMI). None of the units could be occupied by those earning more than 80 percent of the AMI;
- Changing the formula that produces the 9 percent and 4 percent credit rates;
- Adding preservation of federally assisted affordable housing to the selection criteria for LIHTC allocation. This would join other criteria that housing agencies must include in their qualified allocation plans; and
- Making housing credits beneficial to real estate investment trusts (REITs). This would help increase the demand for LIHTCs.
