LIHTC Ready to Assist with the Shortage of Affordable Housing Exacerbated by Hurricanes Harvey and Irma

September 20, 2017                            By: Roman Petra

As many as 40,000 homes in Houston were destroyed by Hurricane Harvey, while the Florida Keys saw at least 25% of the homes destroyed by Hurricane Irma. Before the hurricanes, there was already a deficiency of affordable housing. Now, the need is even greater, if not dire, to bring affordable housing to those living in the hurricane devastated areas. Different agencies will focus their efforts through various programs to stimulate the development of affordable housing, but one of the best catalysts for development of affordable housing is the Low Income Housing Tax Credit (LIHTC) program, pronounced “lie-tech.” The program was created by Congress in 1986 to raise private equity for construction and rehabilitation of affordable housing by allocating federal tax credits to the owners of the developments. The private equity subsidizes the development, allowing for either some, or all, of the units to be rented at below-market rates to low income tenants.

The LIHTC program has become an integral tool for developing affordable rental housing. The LIHTC program has stimulated the construction and rehabilitation of nearly 3 million affordable homes, supports over 100,000 jobs annually, and generates approximately $9 billion in annual wages and business income. Today, as much as 30 to 40 percent of all new multifamily construction is subsidized using LIHTC. Up to 90 percent of the cost of a rental complex, with the right mix of low income units, may be returned to the owner in federal tax credits............Read More