Important LIHTC Provisions Added to Build Back Better Act
On Nov. 3, the House Rules Committee released amended text for the Build Back Better Act. The amended text proposes putting nearly $12 billion into the LIHTC program and includes measures to strengthen the program.
The backdrop: The Build Back Better bill has gained additional momentum after the House passed a $1.2 trillion infrastructure package on Nov. 5. The enactment of the infrastructure bill is a significant investment in roads, bridges, ports, pipes, and more that is widely expected to make business, deliveries, and commuting easier in the United States. And the Build Back Better bill includes climate and social spending measures that include major investments in affordable housing.
What you need to know: It's estimated that the key measures to expand and strengthen the LIHTC program included in bill could finance nearly 812,000 additional affordable homes than otherwise possible over the next decade. The measures could also create over 1.2 million jobs, $137 billion in wages and business income, and $47 billion in tax revenue.
The following proposals related to the LIHTC program were included in the updated version of the House bill:
- Lower the bond-financing threshold from 50 percent to 25 percent for five years, from 2022 to 2026;
- Increase the annual LIHTC allocation at a rate of 10 percent per year plus inflation from 2022 to 2024, which amounts to a roughly 41 percent increase over current levels in 2024, followed by inflation adjustments after 2025;
- Provide a permanent 50 percent basis boost for sites serving extremely low-income (ELI) households, along with an 8 percent set-aside for sites taking advantage of the ELI basis boost, as well as a limitation on the amount of allocation and volume cap that can be used for sites receiving the ELI boost; and
- Provide a permanent 30 percent basis boost for sites in Indian areas.