On Monday, the White House released a Housing Supply Action Plan with both legislative and administrative actions to help close the housing supply gap in five years. On the administrative side, the plan calls for:
- Finalizing the LIHTC “Income Averaging” proposed rule by the end of September.
- Rewarding jurisdictions that have reformed zoning and land-use policies with higher scores in certain federal grant processes, for the first time at scale.
- Expanding and improving existing forms of federal financing, including for affordable multifamily development and preservation. This includes making Construction to Permanent loans (where one loan finances the construction but is also a long-term mortgage) more widely available by exploring the feasibility of Fannie Mae purchase of these loans; promoting the use of state, local and Tribal government COVID-19 recovery funds to expand affordable housing supply.
- Harmonizing federal requirements across programs like LIHTC, FHA Multifamily, the Housing Trust Fund and HOME.
- Work with the private sector to address supply chain challenges and improve building techniques to finish construction in 2022 on the newest homes in any year since 2006.
- Last September, Fannie Mae and Freddie Mac also increased their equity investment in LIHTC deals, resulting in investments in over 7,000 units. The Enterprises anticipate further growing their LIHTC equity investments in the year ahead.
The plan also calls on Congress to pass the Build Back Better reconciliation bill and the President’s FY 2023 Proposed Budget, which contain the following LIHTC-related provisions:
- Build Back Better Act
- Lower the bond-financing threshold from 50 percent to 25 percent for five years, from 2022 to 2026;
- Increase the annual LIHTC allocation at a rate of ten percent per year plus inflation from 2022 to 2024, which amounts to a roughly 41 percent increase over current levels in 2024, followed by inflation adjustments after 2025;
- Provide a permanent 50 percent basis boost for properties serving extremely low-income (ELI) households; and
- Provide a permanent 30 percent basis boost for properties in Indian areas.
- President’s FY 2023 Proposed Budget
- Provide a discretionary basis boost for bond-financed properties.