According to an article in Affordable Housing Finance Magazine “2008 is going to be a tough year for low-income housing tax credit (LIHTC) developers, with equity prices for credits projected to be lower than they have been in recent years. The one silver lining that might be on the horizon is a proposal to update the LIHTC program and make it more efficient.”
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By most accounts, 2008 is going to be a tough year for low-income housing tax credit (LIHTC) developers, with equity prices for credits projected to be lower than they have been in recent years. The one silver lining that might be on the horizon is a proposal to update the LIHTC program and make it more efficient.
A bill had yet to be unveiled as of late December, but one was expected to be introduced in early 2008.
Early program modifications being weighed include allowing corporate taxpayers to use the LIHTC to reduce their alternative minimum tax liability, fixing the tax credit percentages at 9 percent and 4 percent, and allowing states to award additional credits to certain projects.
Possible proposals are being scored by the Joint Tax Committee to determine which ones would be revenue neutral and which would have a cost associated with them, said Bob Moss, chairman of the Housing Advisory Group (HAG), an industry education and advocacy group, and senior vice president and director of origination at Boston Capital.
Moss is optimistic that Congress will act to update the LIHTC program. “The environment is such that there’s going to be pressure to move forward,” he said, adding that the market faces a number of challenges.
Many investors are uncertain about their tax credit needs for the year, he said. At the same time, developers need every penny they can get for their deals.
Rep. Charles Rangel (D-N.Y.), chairman of the Ways and Means Committee, and his staff have reached out to the industry groups to get their input.
The LIHTC program has done well to build support over the years, said Boston Capital’s David Gasson, executive director of HAG.
“If we can do a stand-alone bill, I think it’s one of the few tax measures that can go through in an election year because of bipartisan support,” he said.
As long as proposals are revenue neutral or follow the “pay as you go” philosophy, the bill has a good chance of passing, according to observers.