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LIHTC Reform

The Low Income Housing Tax Credit (LIHTC) program is the nation's largest rental housing production program, financing approximately 90 percent of all affordable rental housing. Under LIHTC, federal housing tax credits are awarded to developers of qualified projects. Developers then sell these credits to investors to raise capital (or equity) for their projects, in turn reducing the debt that the developer would otherwise have to incur. Because the debt is lower, a tax credit property can offer lower, more affordable rental rates.

In the wake of the economic crisis of 2008, the Housing and Economic Recovery Act of 2008 set the rate for new construction and substantial rehab LIHTC (also known as 9 percent credits) at no less than 9 percent, the amount originally envisioned when the program was created in the Tax Reform Act of 1986. However, this provision will expire for apartments placed in service after 2013. Then, unless a new law extends the fixed 9% rate, new construction and substantial rehabilitation will be underwritten at a floating rate tied to the federal borrowing rate. This could result in a loss of 15-20 percent of the maximum amount of private equity a property could have otherwise received.

Similarly, states are allowed to provide 4% tax credits above their capped (9%) allocation for projects also financed with tax exempt debt. These 4% tax credits are currently set under the floating rate system. Applying the fixed floor rate for acquisition credits at 4% would similarly remove the uncertainty and financial complexity of the floating rate system, simplify administration, and facilitate preservation of affordable housing at little or no cost to the federal government.

An overview of the issues surrounds the proposed 9% and 4% floors for LIHTC
The Department of Housing and Urban Development resource page for LIHTC
The National Low Income Housing Coalition resource page for LIHTC

For Current Status: ACTION Campaign page

National Housing Trust Fund

The National Housing Trust Fund was established as a provision of the Housing and Economic Recovery Act of 2008. The purpose of the NHTF is to increase and preserve the supply of rental housing primarily for extremely low income (households with income 30% or less of the area median). The NHTF is intended as a permanent federal program with funding not subject to the annual appropriations process.

Although legally established, the NHTF lacks a source of funding. It is critical that advocates urge Congress to actively pursue NHTF funding to ensure implementation of the NHTF.

The Department of Housing and Urban Development resource page for the National Housing Trust Fund.

For Current Status:The National Low Income Housing Coalition's resource page for the National Housing Trust Fund.

President's Housing Budget

Each year, the legislative and executive branches of the federal government produce a fiscal year budget. The budgeting process officially begins the first Monday of February when the President submits a budget proposal to Congress. Following this, Congress crafts its own budget for federal fiscal years commencing each October 1.

An overview of the budget process
An overview of the President's budget allocation for the Department of Housing and Urban Development
FY2015 Congressional Justifications
FY2015Budget Chart

For Current Status: The National Low Income Housing Coalition's resource page for the 2015 appropriations process.

Section 8 Reform

The Section 8 Housing Choice Voucher program within the U.S. Department of Housing and Urban Development (HUD) is the core program intended to assist extremely low income people with the cost of housing. Participants pay 30 percent of their incomes toward rent, with the program paying the remainder up to a set maximum. Approximately 2.1 million households receive rental assistance through this program, and 75 percent of all new and turnover vouchers are targeted to people with incomes at or below 30 percent of area median income (AMI), which includes nearly all people who are homeless. Approximately 82 percent of voucher households are attached to the workforce or are elderly or disabled, largely reflecting the targeting of 75 percent of new and turnover vouchers.

There has not been a major overhaul of Section 8 since the late-1990s. Reform of the Housing Choice Voucher program would help the program continue to provide affordable housing to millions of households, while using federal resources more efficiently.Housing advocates are lobbying Congress to make reforms that improve efficiency and protect those served. The House Financial Services Committee has released a series of discussion draft bills that would make major modifications to the voucher program. Previous iterations include SEVRA and SESA. The most recent version is the Affordable Housing and Self-Sufficiency Improvement Act (AHSSIA). AHSSIA died at the end of the 112th Congress and no comprehensive reform legislation has yet been taken up by the 113th Congress.

Voucher Reform Proposals
Rental Assistance Reform Bill/Affordable Housing and Self Sufficiency Improvement Act/Section 8 Voucher Reform Act
Comparison Between SERVA and AHSSIA
Text of Affordable Housing and Self-Sufficiency Improvement Act of 2011
A Section-by-Section Summary of the Affordable Housing and Self-Sufficiency Improvement Act of 2011.
The Center for Budget and Policy Priorities letter of support for the Revised Draft of the Affordable Housing and Self-Sufficiency Improvement Act of 2011.

Policy Basics: Section 8
Minnesota Fact Sheet
Research Shows Housing Vouchers Reduce Hardship and Provide Platform for Long-Term Gains Among Children
Effects of Housing Vouchers on Welfare Families study

For Current Status: NLIHC page on voucher reform.

Federal

Federal Issues

LIHTC Reform

National Housing Trust Fund

President's Housing Budget

Section 8 Reform

Policy

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