HUD FY2012 Budget Includes Two LIHTC Proposals
Reiterating President Obama’s focus on lowering the national debt by “tightening” the nation’s fiscal belt, HUD Secretary Shaun Donovan unveiled the department’s fiscal year 2012 budget proposal, Creating Strong, Sustainable, Inclusive Communities and Quality Affordable Homes. The projected budget specifically targets the low-income housing tax credits (LIHTC) program with two new proposals.
The first, Basic Boost, would give federally assisted housing a 30 percent increase in eligible basis for bond-financed projects in the context of preserving, recapitalizing, and rehabilitating existing affordable housing.
The second, Income Averaging, would replace the cap on household income—currently 60 percent of Area Median Income (AMI)—with an option that properties serve households whose average income is no greater than 60 percent of AMI and with no individual household above 80 percent AMI. Developers would be required to create or preserve units that are comparable in terms of size and quality for all households served.
The proposed budget document states that in FY2012, “HUD will continue to partner with the Departments of Treasury and Agriculture as well as the Domestic Policy Council, Office of Management and Budget, [and] the National Economic Council, to identify ways to make LIHTC a more flexible and nimble tool for the creation and preservation of affordable housing.” The budget document states that the department believes the two proposals will allow states and local agencies administering LIHTC programs greater flexibility, and provide greater incentives to developers to participate in the program.