Representatives Patrick Tiberi (R-OH) and Richard Neal (D-MA) are circulating a letter among their House colleagues to obtain support H.R. 3661, a bill that would make the 9% Low Income Housing Tax Credit (LIHTC) minimum credit amount permanent for new construction and substantial rehabilitation projects, and establish a similar fixed floor rate for the 4% credit for acquisition projects.
A minimum tax credit rate for the 9% credit was included in the 2008 Housing and Economic Recovery Act but will expire for apartments placed in service after the end of 2013. These bills would make the 9% fixed floor permanent and also establish a minimum credit rate for the 4% credits. As enacted in the Tax Reform Act of 1986, the amount of LIHTCs that are awarded to development projects is based on a formula using the federal cost of borrowing to determine the credit rate. As the cost of borrowing declines, the amount of LIHTCs also declines. The bill establishes a minimum credit amount that LIHTC developments would receive, protecting them from reductions in investor equity that can be used to build affordable housing.
The letter explains that the bill is meant to keep in place the 2008 fix, which otherwise expires for properties placed in service after 2013. “Unfortunately, the minimum credit rate expires for properties placed in service after 2013, which is now beginning to impact developments receiving allocations from state agencies,” Mr. Tiberi and Mr. Neal write in their letter.
View the letter at: http://nlihc.org/doc/LIHTC_HR3661_Colleague_Letter_2012.pdf.