President Puts LIHTC Proposals in 2012 Budget Request
On Feb. 14, President Obama announced his fiscal year (FY) 2012 budget proposals, noting the proposals represented a "responsible approach that will make the tough choices to cut spending and cut the deficit." Among the proposals are two Low-Income Housing Tax Credit (LIHTC) proposals included in the Department of Treasury budget.
Specifically, one proposal would allow LIHTC properties to elect an average-income criterion, a provision that was also proposed in the FY2012 budget but not enacted. This would allow properties to expand the incomes served through their properties while still maintaining property compliance. Units could be occupied by individuals or families earning up to 80 percent of area median income (AMI) so long as they are offset by units occupied by individuals or families earning less than 60 percent of AMI — or significantly less — resulting in an average of 60 percent of AMI.
In addition, the administration proposes allowing for a 30 percent basis boost for properties financed with tax-exempt bonds that are subject to a private activity bond volume cap. The properties eligible for this boost would involve preservation, recapitalization, and rehabilitation of existing, federally funded, housing subject to long-term use agreements limiting occupancy to low-income households. This proposal would be limited to properties whose financing includes tax-exempt bonds whose aggregate issue price is not more than an amount equal to 0.4 percent of the state's volume cap for the calendar year in which the bonds are issued.