This week, congressional leaders passed a spending bill that includes a significant increase in funding for affordable housing and community development programs at HUD and USDA. The spending bill also includes an increase in Low Income Housing Tax Credits (LIHTC) and an important reform to the tax program.
Thank you to Minnesota and national advocates, including our partners at the National Low Income Housing Coalition, for their tireless work to achieve this good result.
The spending bill includes two key provisions from the Affordable Housing Credit Improvement Act (S. 548 / H.R. 1661):
A 12.5 percent increase in Housing Credit allocation for four years (2018-2021), and
Income averaging, on a permanent basis after enactment of this bill, which would allow the 60 percent of area median income ceiling to apply to the average of all apartments in a project rather than each individual Housing Credit apartment.
New data released this week by HUD on residents of LIHTC properties at the end of 2015 shows how critical the program is in supporting low wealth households, families, seniors and people with disabilities in Minnesota.
For instance, in Minnesota, the median income for tenant households was $17,996 and more than half of residents earned less than 30 percent of the area median income. More than 1/3 of households contained children under the age of 18, 22 percent were headed by seniors and 8 percent (above the national average of 5 percent) included a resident with a disability. Demographically, the highest percentage of residents were white (32%) followed by Black (24%) and Native (2.5%) households. While less than half of LIHTC households received monthly rental assistance, the leading sources of federal rental assistance in Minnesota are derived from HUD Multi-family Project-Based Rental Assistance (31%), followed by Housing Choice Vouchers (29%) and Project Based Vouchers (27%).
In addition to LIHTC changes, the spending bill also includes:
- $1.36 billion for the HOME program
- $3.3 billion for the CDBG program
- 10 percent increase over FY 2017 HUD funding, totaling more than $11 billion over the Trump administration budget proposal.
Rural housing programs were generally set at the FY 2017 level, with increases for Section 502 direct loans, home repair grants, housing preservation grants and the multi-family rental preservation. The bill also includes $250 million for the CDFI Fund, which helps fund housing and community development projects throughout the nation.
Unfortunately, not all hoped-for changes were included in the bill. Creating a floor of 4% for the 4% credit, part of the deal earlier in the week, was not presented in the final deal. This increase was important as an additional tool to offset the projected annual loss in LIHTC market value from the Tax Reform Bill of 2017.