In addition to protecting and preserving the Housing Credit as a permanent part of the tax code, over 450 national, state, and local A.C.T.I.O.N. coalition members from every state in the nation support the following legislative proposals to improve the efficiency and effectiveness of the Housing Credit program at little or no cost to the federal government:
Enact a permanent 9 percent minimum rate for new and substantial rehabilitation Housing Credits
The Housing and Economic Recovery Act of 2008 (HERA) temporarily enacted a minimum rate for new construction and substantial rehab Housing Credits (9% Housing Credits) from each state’s allocation of 9 percent. This fixed rate removed the uncertainty and financial complexity of the floating rate system, simplified state administration, and facilitated development of affordable housing.
The expiration of this provision will begin impacting developments in the coming months and will likely lead to a sudden and substantial reduction in the amount of equity that a development could receive for its Housing Credit allocation.
Enact a permanent minimum rate of 4 percent for acquisition Housing Credits
Acquisition Housing Credits (4% Housing Credits) are currently underwritten using the floating rate system. Applying a minimum rate to acquisition Housing Credits of 4 percent will instill financial certainty, ensuring the financial feasibility of these types of affordable housing development.
Acquisition Housing Credits are less than 10 percent of all allocated Housing Credits according to the National Council of State Housing Agencies (NCSHA), so the incremental additional cost of extending the fixed floor rule to acquisition Housing Credits would be minimal.