The recently passed 1.29 trillion federal budget provides increased funding for affordable housing and HUD. Here are five ways the budget helps LIHTC transactions:
1. Tax Credit Value: The value of tax credits fell when the corporate tax rate was reduced to 21 percent. The bill increases LIHTC allocations by 12.5 percent which will increase the number of affordable housing projects.
2. Block Grants: The CBDG and HOME funding programs received $305 million and $412 million respectively. Grants can be combined with LIHTC to provide funding to difficult projects.
3. Public Housing Capital Funds: Public Housing capital funds are increased by more than 40%. These funds can be combined with LIHTC in a RAD transaction to rehabilitate and develop new projects.
4. Project Based Section 8: Section 8 funding was increased by 6.5%. These funds can be combined with LIHTC to provide permanent financing in conjunction with LIHTC.
5. RAD: The bill more than doubles the cap of public housing units that can convert to RAD expanding the previous 185,000 unit cap to 455,000 units. These additional units will allow all pending RAD transactions to go forward.