Housing Tax Credit Seeks Solutions

Legislation | May 22, 2020 | by Linda Couch

The HEROES Act, which passed the House on May 15, did not include the ACTION Campaign’s main legislative ask: enactment of a minimum 4% Low Income Housing Tax Credit rate. LeadingAge, a member of the Steering Committee of the ACTION Campaign, supports this and other asks to protect and improve the LIHTC during the pandemic.

The HEROES Act, which passed the House on May 15, did not include the ACTION Campaign’s main legislative ask: enactment of a minimum 4% Low Income Housing Tax Credit rate. LeadingAge, a member of the Steering Committee of the ACTION Campaign, supports this and other asks to protect and improve the LIHTC during the pandemic.

On May 5, LeadingAge joined more than 2,000 other organizations in a letter to Congress supporting a 4% minimum LIHTC rate floor, lowering the 50% bond financing threshold for 4% LIHTC developments, increasing the annual Housing Credit allocation by 50%, and providing additional basis boosts for vulnerable properties impacted by COVID-19.

The ACTION Campaign has identified the 4% credit floor as its top priority for the next COVID-19 relief bill.  A minimum 4% LIHTC rate will make more developments financially feasible in light of the historically low rate, now down to 3.08%, that has fallen precipitously as the result of the cuts to the federal borrowing rate in response to the pandemic.

The IRS has updated the applicable federal rates for June, and the “4%” rate is falling even farther; it will now be an even lower all-time low of 3.07% for June. Novogradac estimates that nearly 126,000 additional affordable rental homes would be created or preserved over 2020-2029 with a minimum 4% LIHTC rate

On April 3, LeadingAge sent a letter to the IRS about resident and provider relief and 12-month extensions of a long list of deadlines for the LIHTC program. In addition to the issues outlined in the May 5 letter to Congress, LeadingAge’s April 3 letter expressed LeadingAge’s strong concerns about the lack of resource for LIHTC communities grappling with COVID-19 costs. Subsequently, the IRS extended several LIHTC deadlines into July.

More than 800,000 older adults live in the nation’s more than three million LIHTC homes. Like other federally-subsidized residents, LIHTC residents are protected from eviction for nonpayment of rent until July 24. Residents may face steep piles of rent arrears due after the end of the eviction moratorium, a concern for all. And, unlike for HUD-assisted communities, LIHTC communities have yet to receive any resources from Congress to cover their COVID-19 related costs.