Tax Reform Uncertainty Making Affordable-Housing Funds More Urgent in New York State
New Yorkers are at risk of losing thousands of new, affordable housing units if state officials fail to provide $2 billion in housing funds that have been languishing since the state budget was passed on April 1. The $2 billion was promised in a memorandum of understanding (MOU), but the governor and state legislative leaders have been unable to reach an agreement to allocate the housing funds.
The uncertainty of tax reform at the federal level and its impact on the Low Income Housing Tax Credit is making matters more urgent. Potential tax reforms are already increasing the cost of financing that developers need to build and preserve affordable housing. Additionally, plans to lower corporate tax rates also are expected to devalue low-income housing tax credits, a key way to get private financing to build affordable units. This means more subsidy may be required in each deal in the future. MOU funds may not stretch as far if federal tax reform is implemented.
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