Recent Disasters Put Spotlight on LIHTC Program for Recovery Efforts
Hurricanes Harvey, Irma, and Jose have added pressure on Congress to assist in the recovery efforts of the affected areas. And industry experts have pointed out the effectiveness of the LIHTC program to direct private capital into affected areas.
Recently, Rep. Tom Reed of New York re-introduced the National Disaster Tax Relief Act to provide aid to federally declared natural disaster areas between 2012 and 2015. The bill is essentially a Superstorm Sandy package and it would increase the LIHTC ceiling by the greater of $8 multiplied by the population of the qualified disaster area or 50 percent of the state housing credit ceiling for federally declared disaster areas during calendar years 2012 to 2015. The bill reflects efforts Congress previously made in response to Hurricanes Katrina, Rita, and Wilma in 2005. Congress had passed the Gulf Opportunity (GO) Zone Act of 2005, with the goal of leveraging LIHTCs to create and restore affordable housing in areas impacted by recent hurricanes. At the time, housing needs in New Orleans in particular pushed Congress to work specifically on behalf of low-income renters. The 2005 act created or restored tens of thousands of housing units for low-income families.
The amount of housing tax credits that the federal government allocates to each state varies from state to state by population. Typically, the value of the credit hovers around $2 per state resident. But from 2006 to 2008, due to the GO Zone Act, in the parts of the Gulf Coast states proscribed by the Katrina GO Zone, the amount increased to $18 per resident. These tax credits totaled up to $47 million for Alabama, $100 million for Mississippi, and $200 million for Louisiana.