Senator Wyden Reintroduces DASH Act to Expand LIHTC
Senate Finance Committee Chairman Ron Wyden recently reintroduced the Decent Affordable, Safe Housing for All (DASH) Act, which implements sweeping reforms to affordable housing financing in an effort to combat homelessness and expand affordable housing access.
The DASH Act includes the Emergency Affordable Housing Act and draws from proposals in the Affordable Housing Credit Improvement Act. These LIHTC provisions are projected to produce nearly 1 million new affordable housing units over the next 10 years. Here are some of the legislation’s highlights as it pertains to the LIHTC program:
Expanding LIHTC production. The bill would expand the 9 percent housing credit by 50 percent, ramped up over two years. The provision makes permanent the 12.5 percent expansion in the 9 percent housing credit that expired in 2021 and increases the 9 percent housing credit and the small state minimum by 50 percent on top of this. The provision phases in this increase over 2023 and 2024, then indexes amounts to inflation.
Increasing LIHTCs for projects that target deeper affordability. The bill would provide a 50 percent larger housing credit for projects that house extremely low-income families (those with incomes below 30 percent of median). It requires at least 8 percent, not to exceed 13 percent, of the state housing credit ceiling of a state to be allocated to certain buildings with extremely low-income households.
The provision makes certain extremely low-income buildings eligible for a 50 percent basis boost for LIHTC buildings in which at least 20 percent of the occupied units are rent restricted and which have been designated for occupancy by households the aggregate household income of which does not exceed the greater of 30 percent of area median gross income, or 100 percent of an amount equal to the federal poverty line.
Provide a basis boost to rural and tribal projects. The bill modifies the definition of a Difficult Development Area (DDA) to automatically include projects located in an Indian area, making these projects eligible for the 30 percent basis boost. This provision would allow these projects to receive more housing credit equity than would otherwise be available to them.
The provision bill also gives states the ability to provide up to a 30 percent basis boost to properties in rural areas if needed for financial feasibility, by qualifying rural areas as Difficult Development Areas. This would allow these developments to receive more housing credit equity than would otherwise be available to them.
Closing loopholes to preserve affordable housing. The bill repeals the “qualified contract” option that allows LIHTC owners to convert properties to market rate after just 15 years. This provision eliminates the qualified contract option for taxpayers receiving LIHTC credits after Dec. 31, 2023. For taxpayers who received LIHTC credits before Jan. 1, 2024, and who submit a written request for a qualified contract after the date of enactment, the provision repeals the current inflation adjustment formula. Instead, it requires a fair market value purchase price that must factor in current rent-restricted units.