Senator Wyden Proposes a Middle-Income Housing Tax Credit Program
Senator Ron Wyden (D-OR) recently released a discussion draft of legislation to create a new middle-income housing tax credit (MIHTC) program. The MIHTC discussion draft is a detailed legislative proposal, but it is not final. It’s being circulated to stakeholders, members of Congress, federal officials, and others for review and comment. The program is modeled after and is intended to work with the LIHTC program.
The proposed new credit would allocate funds to states based on population. The proposal envisions a state middle-income credit cap of $1 per capita with a small state minimum of $1.14 million, adjusted for inflation in future years. State housing authorities would then follow a competitive process to allocate the tax credits to developers for individual projects, either new construction or rehabilitations.
To fit the new MIHTC program to the different needs of cities around the country, the qualification standards for the new MIHTC program would be tailored to local economies and incomes. Tenants’ rents in the MIHTC sites would not exceed 30 percent of area median gross income (AMGI). Furthermore, MIHTC would require at least 60 percent of a property’s units to be occupied by individuals or families with incomes that fall between 60 and 100 percent of AMGI. That would align the new middle-income credit with the LIHTC, which caps the incomes of those in qualifying projects at 60 percent of AMGI.
To help guarantee that the MIHTC program doesn’t detract from investment in low-income housing, Wyden is proposing that a state’s unused MIHTC dollars would be returned to the existing pool of funding for LIHTC.