Current Legislative Proposals For The 112th Congress
Through the Affordable Rental Housing A.C.T.I.O.N. campaign, LIHTC industry has gained nationwide support for a legislative provision which would enact a permanent rate of not less than 9 percent for new construction and substantial rehabilitation credits(9% LIHTC Credits), and apply the same policy to acquisition credits (capped 4% LIHTC Credits) at a rate no less than 4 percent - the rates originally envisioned in the Tax Reform Act of 1986.
The Housing and Economic Recovery Act of 2008 (HERA) enacted a provision to temporarily create a fixed floor rate of 9 percent for 9% LIHTC Credits. Over the past years, this provision has promoted investment as it eliminates the financial risk and uncertainty associated with the "floating rate" system. As the HERA provision is only applicable to LIHTC properties placed-in-service through 2013, the expiration of this provision will begin to negatively impact LIHTC allocations beginning in early 2012. If the new legislative provision is not enacted in early 2012, the amount of private equity investment for proposed LIHTC properties could be reduced by 15 - 20 percent.
The proposed legislative provision would ensure that LIHTC properties can receive the private equity needed to make the projects financially feasible. This efficiency measure would come at little or no cost to the federal government.
Read more about this topic: Low-Income Housing Tax Credit
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