The two key LIHTC provisions contained in the spending bill are also included in the Affordable Housing Credit Improvement Act bills (S. 548 / H.R. 1661). However, the additional bills seek to expand the LIHTC program significantly by assisting in creating or preserving approximately 1.3 million affordable homes, an increase of 400,000 more units than is possible under the existing program.
Of importance to tribes, the bills include language to designate tribal government communities as “Difficult to Develop Areas,” making housing developments automatically eligible for a 30% boost to increase investment of LIHTC. The bills also require states to consider the needs of Native Americans when allocating tax credits. NAFOA testified in an Oversight Hearing to share how modernizing tax policies, such as the LIHTC, could build tribal economies and the importance of having tribal-specific provisions in the program.
“The LIHTC is the primary source of financing for the construction and preservation of affordable housing on tribal lands as land restrictions and collateral is an issue. The program provides the private market with greater incentives to invest in affordable housing." said Tina Danforth, NAFOA President.
If passed, the bills would be one of the most significant updates to the LIHTC program in its 30-year history. These measures aim to improve the LIHTC and offset the projected annual loss in the market value from the Tax Reform Bill of 2017. The corporate tax rate decreased from 35% to 21%, which could reduce investor demand resulting in fewer homes built under the program.