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The
finalized income-averaging rule for the Low-Income Housing Tax
Credit now allows a broader mix of income levels among residents
of qualifying projects, by using an average, rather than fixed
limits for all units.
The rule clarifies a 2018 law passed by Congress to allow
developers more flexibility in qualifying for the credits.
Previously, projects qualifying for the tax credit, which can
offset up to 70% of an affordable housing project's costs,
needed to make at least 20% of the units available to residents
earning 50% of the local area's median income (AMI) or 40% of
the units at 60% of AMI.
A Treasury official said the new regulation allows for at least
40% of a project's units to meet an average of 60% of AMI --
allowing more higher-income tenants to mix with lower-income
residents.
Dave Borsos, vice president of capital markets at the National
Multifamily Housing Council, an industry trade group, said the
change would keep more low-income people in such units even if
their income rises slightly. Such units are typically rented at
30% of a tenant's gross income or less.
"The concern that we had as an industry was what happens when
you have somebody who is suddenly making 61% of the income
threshold, which would have required you to force that person to
leave the property," he said.
Delays to deadlines for when a property is placed in service to
qualify for the tax credit will also keep some projects from
being disqualified due to delays in construction and supply
chain problems prompted by the pandemic, Borsos said.
The Federal Housing Finance Agency also has taken steps to allow
housing finance enterprises Fannie Mae and Freddie Mac to
provide an additional $6 billion in "forward commitment"
financing per year to allow developers of affordable housing
projects to secure long-term financing.
The changes announced on Friday follow Treasury's move in July
to allow state, local and tribal governments more flexibility to
funnel COVID-19 rescue funds to affordable housing, including
through direct long-term project loans.
(Reporting by David Lawder; Editing by Leslie Adler)
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