LIHTC in the Crosshairs: Elimination, Expansion, or Evolution?

In this week’s episode of Tax Credit Talks, hosts Hallie James and Parker An explore the complex and at times contradictory state of Low-Income Housing Tax Credit (LIHTC) policy. With housing demand growing and new apartment construction slowing, LIHTC remains essential, but its future is being debated at both federal and local levels.

What We Covered:

• Demand is up, supply is down
  Mortgage rates are hovering near 7 percent, and apartment completions are down 28 percent compared to last year. This creates significant pressure on rental supply, especially for affordable housing.
• A proposal to eliminate LIHTC
  Representatives Grothman and Gosar have introduced a bill to eliminate the program entirely, arguing that it benefits developers and banks more than tenants. Their proposal claims it could save $69.1 billion over ten years.
• Cincinnati’s local success
  In contrast, Cincinnati secured three LIHTC awards this year, its best showing since 2022. Strong local coordination between the city and the Cincinnati Development Fund was credited with helping projects secure the funding they needed.
• Federal enhancements on the table
  The FY 2025 House budget proposal includes a 30 percent basis boost for rural and tribal LIHTC developments, aimed primarily at 4 percent bond-financed projects. This would increase credit allocations for eligible developments and potentially improve deal feasibility.

Key Takeaways:

• LIHTC continues to be a vital tool, but it is facing political and policy scrutiny.
• Local implementation can significantly impact outcomes, as seen in Cincinnati.
• Targeted enhancements, such as basis boosts, may strengthen the program without requiring a full redesign.
• The future of affordable housing may rely on striking the right balance between policy reform and practical, proven incentives.

Final Thoughts:

This episode underscores the importance of staying engaged with current policy developments. Whether you’re placing credits, developing projects, or exploring new strategies, understanding the shifts in LIHTC policy is essential for navigating what’s ahead.

Listen to the full episode: https://podcasts.apple.com/us/podcast/lihtc-in-the-crosshairs-elimination-expansion-or/id1816285847?i=1000712474398
To speak with our team, reach out at team@fallbrookfinance.com with the subject line “Tax Credit Talks.”

Fallbrook Financial Services is one of the largest state tax credit brokerages in the country. With over $6 billion in credits placed across renewable energy, housing, film, brownfields, and more, we’re here to help you put your credits to work.