Senator Maria Cantwell (D-WA) and Senate Finance Committee Chair Orrin Hatch (R-UT) introduced the “Affordable Housing Credit Improvement Act of 2016.” The bill would increase the allocation of Low Income Housing Tax Credits (LIHTCs) by 50% over a five-year period, make the 4% tax credit rate floor permanent for acquisition and bond-financed projects, and establish an income averaging provision. Senate Finance Committee Ranking Member Ron Wyden (D-OR) and Senator Charles Schumer (D-NY) joined as original co-sponsors of the bill introduced on May 19.
The 50% increase in LIHTC authority would be phased in by 10% increments from 2016 to 2020. The per capital amount of tax credits states would receive would increase from $2.35 in 2016 to $3.53 in 2021. The minimum tax credit amount a state could receive would increase from $2,690,000 in 2016 to $4,035,000 in 2021.
Currently, projects seeking LIHTC benefits must choose one of two options: ensuring at least 20% of the units are rent-restricted and occupied by households with incomes less than 50% of the area median income (AMI), or ensuring at least 40% of the units are rent-restricted and occupied by households with income less than 60% of AMI. The Cantwell-Hatch bill would introduce a third “income averaging” option, requiring at least 40% of the units in a project are occupied by residents with incomes that average no more than 60% of AMI, with no rent-restricted units occupied by households with incomes greater than 80% of AMI.
On March 24, Senator Cantwell announced plans to introduce legislation to expand and reform the LIHTC program that, along with the provisions in the May 19 bill, would also provide for a 50% basis boost for projects targeting extremely low income (ELI) or homeless families (see Memo, 4/4). A basis boost results in more investment in a project. The bill introduced on May 19 did not include the ELI targeting option, which would result in an increase in the supply of rental units for ELI households, the population with the greatest need for affordable homes. NLIHC looks forward to working with Senators Cantwell and Hatch on accompanying legislation to be introduced in coming weeks that would provide incentives for deeper targeting.
The bill is at: http://bit.ly/1TK05k4
More information about LIHTC is on page 5-32 of NLIHC’s 2016 Advocates’ Guide at: http://bit.ly/1Tn9sqm