By Jo Ikelheimer, MA, RHM, Director of LIHTC Compliance
This year marks the 30th anniversary of the Tax Reform Act of 1986’s passage and subsequent enactment of the Low-Income Housing Tax Credit Program. The milestone was observed at the National Council of State Housing Agencies' Housing Credit Connect conference earlier this summer in Seattle, where it generated much reminiscing over the program's creation, its plight over the years, and speculation over where it is heading.
The keynote speaker for the opening plenary was Senator Maria Cantwell (D-WA), who recently introduced the Affordable Housing Credit Improvement Act of 2016, which contains a number of provisions that would benefit the program if and when it becomes law. Co-sponsoring the bill is Senator Orin Hatch (R-Utah), who represents critical bipartisan support which strengthens its chances of passage.
The main provision of this legislation would be to increase the housing credit authority to the state allocating agencies by 10% every year for a five-year period of time, culminating in a 50% increase overall. This would result in the creation or preservation of approximately 400,000 much-needed rental housing units over the next decade.
In addition, the bill proposes to fix the 4% applicable rate for federally-subsidized LIHTC projects and allows for income averaging at 60% AMI, with income qualification going up to 80% AMI, which is higher than the current 60% cap for the program. The thought behind this is that it will make LIHTC "deals" more viable in rural and high-cost areas of the country. There was also speculation of a second housing credit bill to follow this one that will address more detailed issues to help strengthen the program even further.
Other issues addressed at the conference include the three General Accounting Office (GAO) reports reviewing the LIHTC program with emphasis on the most recently published account focusing on state housing agency program administration which was found to be favorable. In fact, the report was much more positive for the state agencies than the first report published analyzing the IRS’s oversight of the program which was found to have significant deficiencies. The third report, which will deal with LIHTC development cost and project characteristics issues, is expected to be published early next year.
In addition, the new compliance monitoring requirements for LIHTC was another hot topic of discussion at the event. This includes the provision that the REAC protocol may be used for physical inspections during monitoring reviews, file audits, and unit inspections may now be decoupled, and provides a new minimum sampling size schedule. NCHM advises that you check with your state agency for guidance on how they will be implementing these new changes in their compliance monitoring practices.
Thirty years of success with LIHTC was the overriding conclusion at this informative annual gathering of the industry’s most notable professionals. I’m happy that NCHM has played an active role in helping achieve this result and I congratulate all of you who have also contributed to its success. Happy birthday LIHTC – let’s go for 30 more!