Lowered 50 Percent Test Could Result in the Financing of 177,665 to 1.4 Million Affordable Homes

The National Council of State Housing Agencies and Novogradac released a report examining the impact of lowering the 50 percent test for four percent LIHTC and tax-exempt bond financed properties and found that a lowered test could result in the financing of between 177,665 and 1,421,320 affordable homes over the next ten years. The model considers the impact of the test being lowered to 40, 33 and 25 percent and includes several assumptions like a ten percent cushion. The chart below displays the amount of private activity bond cap “freed” over ten years from the lowered tests and the number of additional units financed over ten years if gap financing was scaled at 50 and 100 percent to cover the lost tax-exempt bond debt from a lowered 50 percent test.

Over Ten Years 40 Percent Test 33 Percent Test 25 Percent Test
“Freed” Bond Cap $37.5 billion $63.7 billion $93.7 billion
Additional Homes Financing Capacity

50 percent scalable gap financing

177,665 366,098 710,660

100 percent scalable gap financing

355,330 732,195 1,421,320