A.C.T.I.O.N. Members Urge Congress to Support Investment in LIHTCs
In its first joint effort, members of the Affordable Rental Housing (A.C.T.I.O.N.) (A Call to Invest in Our Neighborhoods) Campaign met with Capitol Hill staff members to discuss industry consensus proposals included in a letter recently sent to urge Congress to enact proposed changes to the low-income housing tax credit in upcoming tax legislation.
The A.C.T.I.O.N. Campaign is a grassroots effort focused on stimulating investment in affordable rental housing led by a national coalition of cross-industry organizations (see www.rentalhousingaction.org). Its goal is to restore the amount of affordable rental housing built, rehabilitated, and preserved annually.
The coalition said, in a press release, that “the LIHTC revolutionized affordable rental housing finance and has become the nation’s largest and most effective affordable rental housing production program.” Since its inception, LIHTC program has helped to finance more than 2 million units of rental housing. But because of the weakened economy and investors cutting back their demand for tax credits, as many as 60,000 fewer units will be constructed or preserved.
The composition of LIHTC investors has changed over time—from individuals in the earliest years of the program to institutional investors across a range of industries, and finally, to the current investor base of large financial corporations. However, this narrowed investor base left the LIHTC market susceptible to the credit crunch affecting financial institutions beginning in 2008.
According to A.C.T.I.O.N., LIHTC investment levels fell dramatically from about $9 billion in 2007 to approximately $5.5 billion in 2008. Since most affordable rental housing development depends on capital raised from the LIHTC, many state-approved developments have been stalled or abandoned as a result.