Sen. Sherrod Brown (D-Ohio) announced last week that he would co-sponsor a bill to extend and enhance the low-income housing tax credit.
The legislation would extend the nine percent minimum credit for construction or substantial property rehabilitation and would establish a four percent minimum for the acquisition of existing housing.
The LIHTC provides tax credits to affordable housing developments, which use the credits to attract private equity capital to help finance properties. Two kinds of credits are offered—one for 70 percent of the cost of constructing or rehabilitating property and one for 30 percent of the cost of acquiring existing property.
“The Low-Income Housing Tax Credit is the country’s most successful affordable housing program,” Brown said. “It finances approximately 90 percent of all affordable housing developments nationwide. All across Ohio the credit is making a difference. From Lucas County, where it provided the capital to build Lakewoods, a 48-home complex for low-income seniors; to Cuyahoga County, where the credit funded the redevelopment of historic Cogswell Hall. These are just two of many examples of the impact the program has made.”
Sen. Maria Cantwell (D-Wa.) originally introduced the legislation earlier this month. The nine percent credit was included in the 2008 Housing and Economic Recovery Act, but it is set to expire for apartments placed in service after the end of the year. The American Taxpayer Relief Act, however, provided a credit floor for projects allocated tax credits by year’s end.
The National Low Income Housing Coalition said the amount of tax credits awarded is determined using a formula that calculates the federal cost of borrowing to determine the rate. As the cost of borrowing decreases, so do the number of LIHTCs.