The Biden administration released an update to its “Housing Supply Action Plan” (see Memo, 5/16) on October 7, listing new ways the administration has reduced barriers to affordable housing construction and preservation, including the finalization of a U.S. Department of the Treasury (Treasury) rule for the Low-Income Housing Tax Credit (LIHTC) program called the “average income test” (AIT). To qualify for Low-Income Housing Tax Credits, a housing developer must choose between three affordability set-asides to maintain LIHTC units available to low-income households. One of the three affordability requirements available to developers, the AIT rule allows for LIHTC properties to be rented to people who earn up to 80% of AMI, as long as the average rent and income limit for “designated” units does not exceed 60% of AMI. While NLIHC and other housing advocacy organizations are continuing to analyze the impact of the AIT rule, the Biden administration states that the regulation will make it easier “to build mixed-income housing, housing that includes very low-income tenants, and housing in sparsely populated rural areas by reforming the income guidelines for [LIHTC].”
Congress added income averaging as an option to the LIHTC program on March 23, 2018, as part of the “Consolidated Appropriations Act of 2018” (see Memo, 7/16/2018). Income averaging allows LIHTC developers to choose to serve households with incomes up to 80% of AMI, as long as at least 40% of the units are both rent-restricted and occupied by households with incomes that do not exceed the “designated income limits,” which may range from 20% of AMI in 10% increments up to 80% AMI. The rent for a unit must not exceed 30% of the designated income limit – for example, 30% of 20% of AMI, 30% of 30% of AMI, etc.
Read the Biden administration’s announcement at: https://bit.ly/3V58JSp
Read a description of the average income test rule in the Federal Register at: https://bit.ly/3T19iLH
Read NLIHC’s statement on the “Housing Supply Action Plan” here.