WASHINGTON, D.C. – May 7, 2015 – (RealEstateRama) — U.S. Senator Angus King (I-Maine), along with Senators Maria Cantwell (D-Wash.) and Pat Roberts (R-Kan.), has introduced bipartisan legislation that would reauthorize a critical tax provision for improving access to affordable housing and spurring private investment in developments that support small businesses and construction jobs nationwide.
The Improving the Low-Income Housing Tax Credit Rate Act would reauthorize the Low-Income Housing Tax Credit (LIHTC), which is the primary tool for financing 90 percent of affordable housing projects in the United States. The legislation would improve access to housing and incentivize private investment in low-income construction projects by providing greater certainty and ensuring stronger market stability.
“Every year the Low-Income Housing Tax Credit helps give thousands of people a home, and in the process, it also stimulates private investment and supports job growth, making it one of the government’s most successful programs,” Senator King said. “By improving the structure of the credit rate and permanently extending it, we can instill greater stability in the program, which will drive private investment, produce more homes, and further improve the overall effectiveness of the credit – a win for everyone involved.”
The legislation would amend LIHTC by permanently extending the tax credit rate to 9 percent of eligible costs on new construction and 4 percent for the acquisition of existing housing. Under the current program, LIHTC has a variable rate that is linked to federal borrowing costs, adding uncertainty to the market and deterring potential investors.
LIHTC is the primary mechanism for funding 90 percent of affordable housing projects in the United States. Since its creation in 1986, the program has created 2.4 million housing units and supports 95,000 jobs each year. In Fiscal Year 2015, more than $3 million in tax credits was allocated to 6 affordable housing projects throughout Maine. The tax credits leverage approximately $25 million annually in private investment in the state.
