GAO Issues Report on 2008 LIHTC Changes

By
2 min read

The Government Accountability Office (GAO) recently issued a report that examines the implementation by state allocating agencies of 2008 legislative changes to the federal low-income housing tax credit (LIHTC) program and the impact of these changes.

The Housing and Economic Recovery Act (HERA) of 2008 made more than 20 changes to the LIHTC program. It provided a temporary boost to states in the annual per capita housing credit volume cap, set a temporary minimum rate of 9% for the 70% present value housing credit, and allowed state allocating agencies to provide a basis boost in credit awards to projects outside of high-cost areas.

HERA directed GAO to study the changes to see if they fostered more LIHTC projects.

GAO found that while HERA’s broad effects on the LIHTC program are difficult to measure, stakeholders generally believed there was a temporary increase in per capita tax credit allocations. It noted that the temporary rate floor for the 9% credit and additional discretion to state agencies to make enhanced credit awards seemed to improve the financial viability of many projects.

GAO also found that several federal and state agencies have made significant changes to LIHTC program guidance to accommodate provisions of HERA. For instance, the IRS issued notices and revenue procedures reflecting changes made by HERA and several state allocating agencies made modifications to their LIHTC qualified allocation plans.

Finally, GAO’s report noted that HUD’s LIHTC project database generally seems to include incomplete information about project characteristics between 2006 and 2010. GAO notes that without more complete data on the LIHTC program, the federal government’s ability to evaluate basic program outcomes such as how much LIHTC housing has been produced, as well as overall federal efforts to provide affordable housing, may suffer.

(Report: http://tinyurl.com/a5s8mvl)