Note: This story was updated on March 27, 2018.

The low-income housing tax credit (LIHTC) program will receive a 12.5% increase for the next four years under a $1.3 trillion omnibus spending plan agreed to by Congress.

Maria Cantwell
Maria Cantwell

“This is the first increase in over a decade,” said Sen. Maria Cantwell (D-Wash.), who championed the LIHTC boost. “Nearly $3 billion is a good start toward tackling the housing crisis in our cities and rural communities. The increase couldn’t come at a better time. This down payment will help us deal with the tremendous deficit we have in affordable housing.”

Cantwell, who has been pushing to expand the LIHTC program for several years, cited how the recent tax reform bill harms future development of affordable housing. Although the 2017 tax legislation retained the housing credit program, several other measures in the bill are expected to significantly reduce the number of affordable homes built in the nation.

Congressional leaders reached a tentative deal on the new spending bill on March 21. President Donald Trump then signed the bill two days later after both the Senate and House voted to approve the legislation.

"Enterprise is thrilled that the omnibus will strengthen and expand the low-income housing tax credit,” said Emily Cadik, senior director of public policy at Enterprise, in a written statement. “We especially want to thank Sen. Cantwell for her fierce determination to make more homes affordable to the 11 million households who struggle to keep a roof over their heads. These proposals from the Cantwell-Hatch Affordable Housing Credit Improvement Act have been enacted at a time when they could not be more urgently needed.”

Officials at the California Tax Credit Allocation Coalition said it was planning to add the additional credits available for 2018 to its second-round credit estimate.

In addition to an increase in credits, the spending plan allows for an average income test, enabling the 60% of the area median income ceiling to apply to the average of all apartments in a development.

The omnibus bill also increases funds for the Department of Housing and Urban Development (HUD), including public housing and HOME programs.

David M. Dworkin, president and CEO of the National Housing Conference, called the fiscal 2018 funding bill "the most important housing legislation in many years."

He cited the bill's inclusion of $1.36 billion for the HOME program, $3.3 billion for the Community Development Block Grant program, and a 10% increase over fiscal 2017 HUD funding, totaling more than $11 billion over the Trump administration budget proposal. It also includes $250 million for the Community Development Financial Institutions Fund, which helps fund housing and community development projects throughout the nation.

“I am especially appreciative that the House and Senate leadership were able to come together after very difficult negotiations to reach a bipartisan compromise. Washington works best when it is working together on building our country. It’s gratifying that reconciliation and compromise are not the lost arts of political discourse,” Dworkin said.

Denise Muha, executive director of the National Leased Housing Association (NLHA), also applauded the passage of the bill.

“Congress is to be congratulated on recognizing the low-income housing tax credit program’s paramount role in producing and preserving affordable housing," she said. "Increasing allocations of the credit by 12.5% over the next four years and making permanent changes to the program, such as income averaging which will make the program more flexible and allow for more mixed-income housing. The changes were essential in preserving the value of the LIHTC program impacted by the tax reform measure enacted last year, which lowered the corporate tax rate.”

Muha said NLHA also appreciates the increases to several HUD programs.

"The already scarce supply of affordable rental housing has further declined in recent years, exacerbating the challenges to expand and preserve housing opportunities for low- and moderate-income families," she said. "We believe this legislation goes a long way to help address the disturbing trend and look forward to our continued work with policymakers to communicate NLHA’s housing priorities through public/private partnerships."

Officials at LeadingAge, an association for nonprofit providers of aging services, noted that the omnibus bill provides $105 million for new Sec. 202 construction and project-based rental assistance. Aside from $10 million in fiscal 2017 for either new construction or preservation, the Sec. 202 program had not received new construction funding since 2011. The $105 million could result in about 760 new Sec. 202 homes, according to the organization.

The new legislation also expands HUD's Rental Assistance Demonstration program to include Sec. 202 housing for the elderly communities with Project Rental Assistance Contracts (“RAD for PRAC”). "Securing RAD for PRAC has been a priority for LeadingAge for years and gives senior housing providers a proven way to bring private financing to the preservation of their communities," said the organization.