Congress has passed a last-minute deal with $900 billion in COVID-19 pandemic relief and $1.4 trillion in government funding for the rest of fiscal 2021. The pandemic relief and the omnibus package, which President Trump signed Dec. 27, contains big wins for Americans in need, including assistance for struggling renters, an extension on the eviction moratorium, and low-income housing tax credit (LIHTC) improvements.
One of the highlights of the bipartisan bill is the permanent minimum 4% LIHTC rate for housing bonds issued after Dec. 31. Affordable housing stakeholders have been advocating for this fixed rate for the past several years to help provide predictability to the marketplace and increase production by making more developments financially feasible.
According to the Affordable Housing Tax Credit Coalition (AHTCC), the 4% housing credit rate has fallen to lows hovering between 3.07% and 3.09% in recent months due to COVID-19 and ensuing cuts to federal borrowing rates, putting housing developments’ financial feasibility at risk. With the 4% floor, Novogradac & Co. estimates that an estimated 130,000 affordable homes could be created from 2021 to 2030.
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