NLIHC joined a sign-on letter with 13 other national affordable housing organizations in support of a new HUD Housing Notice related to the Qualified Contract (QC) loophole in the Low-Income Housing Tax Credit (LIHTC) program.
The QC loophole allows owners to discontinue federal and state affordability restrictions after just 15 years, rather than the typical 30-year minimum requirement. The QC loophole has led to a substantial loss of affordable rental homes, harming low-income residents and wasting scarce federal investments. Fully eliminating QCs would help protect the affordability of LIHTC properties by holding developers to the 30-year minimum affordability period.
The new Housing Notice, released on August 15, states that starting in 2025, project owners with a new LIHTC allocation must waive their right to use the Qualified Contract (QC) loophole if they want to access the Federal Housing Administration (FHA) Multifamily rental and Risk Share programs (see Memo, 8/19/2024).
The sign-on letter states that the signees “strongly support this new Housing Notice,” which will mitigate the loss of affordable homes. While the new requirement would impact projects with new LIHTC allocations starting in 2025, the signees further recommend that HUD add measures to discourage existing LIHTC projects from utilizing the QC loophole, writing that “our organizations also recommend that HUD prevent owners who exercise the qualified contract provision after December 31, 2024 from accessing FHA Multifamily insurance and participating in Risk Sharing for those properties…We believe this additional restriction would further discourage the use of qualified contracts and protect tenants at risk of having to pay higher rents because of the conversion of the property out of the Housing Credit program.”
With major tax reform coming in 2025, NLIHC will continue to push for LIHTC reforms that focus on households with the greatest needs, including addressing the QC loophole directly in Section 42 of the Internal Revenue Code.
Read the sign-on letter at: https://bit.ly/4guLdsG