Big Wins for Housing – But at What Cost?

In Episode 2 of Tax Credit Talks, hosts Hallie James and Parker An take a deep dive into recent legislation that could significantly reshape the Low-Income Housing Tax Credit (LIHTC) landscape. While many enhancements signal progress, there are potential tradeoffs that raise important questions about long-term impacts on clean energy funding, Medicare, and Medicaid.

What We Covered:

• Bond financing threshold lowered
  The House-passed budget reconciliation bill reduces the bond financing threshold, which broadens access to LIHTC for more affordable housing developments that previously did not qualify.
• Return of the 12.5 percent allocation increase
  This popular provision could boost housing production by giving states additional resources to allocate, encouraging quicker movement on shovel-ready projects.
• 30 percent basis boost for rural and tribal housing
  Developments placed in service between 2026 and 2029 may qualify for enhanced tax credit support, a move intended to address unique challenges in underserved markets.
• Extension of opportunity zones
  These zones could bring additional capital to LIHTC projects located within designated areas, making deals more attractive to investors.
• Potential tradeoffs in the Senate
  As the bill moves to the Senate, concerns have been raised about proposed eliminations of clean energy tax credits and potential cuts to Medicare and Medicaid. These elements could generate resistance and reshape the final package.
• State-level highlights: Maine and Nevada
  Maine’s proposed LD 1755 would increase its Historic Tax Credit from 25 percent to 35 percent for qualifying rural housing projects. Meanwhile, HUD and the Department of the Interior are advancing efforts to convert federal land into affordable housing in Nevada.
• A moment of reflection
  The episode also pays tribute to former Congressman Charles Rangel, a long-time champion of tax credit policy whose legacy continues to shape the housing landscape.

Key Takeaways:

• The federal budget bill includes major potential wins for affordable housing, but could come at the expense of other priorities.
• Lowering the bond financing threshold could make LIHTC more accessible for a wider range of projects.
• States like Maine are using historic tax credits creatively to tackle rural housing needs.
• Federal land reform for housing use, as seen in Nevada, signals growing policy innovation at the national level.
• Legislative progress at both state and federal levels remains contingent on political negotiation and funding priorities.

Final Thoughts:

As housing advocates, investors, and developers watch the evolving federal and state policy landscape, this episode of Tax Credit Talks reminds us that progress often comes with complexity. Staying informed on both the wins and the risks is key to navigating what lies ahead.

Listen to the full episode: Big Wins for Housing – But at … – The Tax Credit Talk – Apple Podcasts
To connect with our team, email 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 more than $6 billion in credits placed across renewable energy, housing, film, brownfields, and more, we are here to help you put your credits to work.