Bipartisan Bill Introduced to Fix LIHTC Rate Floor
On Aug. 1, Senate Finance Committee Member Maria Cantwell (D-WA) introduced legislation to make permanent the temporary 9 percent floor for volume cap housing credits and create a new 4 percent floor for volume cap housing credits used for acquisition. S.1442 mirrors legislation Cantwell and former Senator Olympia Snowe (R-ME) introduced last year, which failed to pass before the end of the session. S. 1442 has been referred to the Senate Finance Committee.
The current 9 percent floor, established in the Housing and Economic Recovery Act of 2008 (HERA) and extended for one year in the American Taxpayer Relief Act of 2012, expires for developments that don’t receive housing credit allocations before Jan. 1, 2014. If Congress doesn’t extend the deadline, developments receiving allocations next year could be negatively affected by lower credit rates, making it more difficult to create much-needed affordable rental housing.
In addition to restoring the value of the credit, this legislation will eliminate the financial risk of the current floating rate system, simplify state administration, and create stability and predictability for owners and investors of housing credit developments.