There are perpetual concerns about affordable housing constructed with Low Income Housing Tax Credits flipping to market rate after the affordability period expires. But states' affordability periods vary dramatically. Vermont requires perpetual affordability and, according to a representative at its housing finance authority, is still seeing a "steady pipeline of demand." While further analysis would be interesting, what's the downside in states where 9% tax credits are already oversubscribed? Thanks to National Housing Trust and Shelterforce for highlighting this issue. https://lnkd.in/e8GSdq-R https://lnkd.in/eZDm5FUb
One slight caveat to the above chart - at least looking at Minnesota the QAP says that applications "can" agree to 50 year restrictions (they get extra points for doing so), but they are only required to agree to 30 year restrictions.
Losing the forest for the trees.... again. The LIHTC program is a tax sponge from the 1986 tax package that replaced even more egregious tax-based real estate LP scheme pre-1986. And, while it has created thousands of units, (which is great) one of THE most critical contributors to the workforce housing affordability crisis TODAY is the LIHTC itself: it is the ONLY production tool, it is highly constricted (insufficient), over-burdensome, and, as usual, subject to leverage and inefficiency in the use of public resources. Of course it's steady demand, and in a 6% debt market, with every project requiring multiple additional gap funds is > $480k/unit in MN!!! and 3-years overdue. While we lose existing workforce housing at 3X the rate. Finally, it is the ONLY source of capital for the projects that need refinancing. The program is cannibalizing itself, trying to refinance existing/expiring ("old") assets as the expense of new creation. Tax-expenditure as the sole production tool for workforce housing is a game of the 1%. Let's put this on the front foot. Discuss.
Chelmsford Housing/C.H.O.I.C.E., Inc.
5moWe have tens of thousands of public housing units across the US that have relied on annual appropriations that fall incredibly short of the actual needs for operating and capital. Recapitalizing assets through the LIHTC program allows a path forward in preserving these assets long term. What may not work for you in your part of the US may work well in another market. What is your State doing to support and preserve housing? Expansion of the LIHTC program is needed and a significant increase in the 4% as well. Personally, our organization has almost 200 units in four developments waiting to move forward. The length of time to receive an allocation and it being the only game in town impacts the numerous populations needing affordable housing. We do need to layer in federal and state rental subsidies to reach low and extremely low income applicants - but it works! Believing that we are going to create new public housing while tens of billions is needed to replace the current public housing stock is a pipe dream. We need production that will have clear mechanisms for long term preservation baked in. :)