The success of the Low Income Housing Tax Credit (LIHTC) has been well-documented, but the program has not been expanded for some time. Senators Cantwell (D-WA) and Hatch (R-UT) recently introduced a bill that would seek to expand the amount of credits allocated by 50.0% over the next five years and enhance other aspects of the program. At last report, the bill has fourteen sponsors in the Senate with strong bipartisan support. However, it is unclear what impact our new political landscape may have upon the bill.
Take-away: Given the steady increase in demand for LIHTC, which has been driven in part by CRA demands and attractive risk-adjusted relative returns, a potential increase in the annual allocation should be welcomed by all participants. Demand for quality affordable housing is robust and affordable housing properties continue to perform well, so an increase in supply would certainly benefit new tenants and allow investment in the sector to bring the current supply-demand imbalance closer to equilibrium.