LIHTC Program Policy Recommendations for Housing Stability Council
Explore the challenges and solutions related to the 4% LIHTC policy recommendations for housing stability. The issue of limited resources due to volume caps on PABs is addressed, along with a recommendation to cap project allocations at 55% of the aggregate building basis to ensure compliance with IRS rules.
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Presentation Transcript
4% LIHTC Program Policy Recommendation Housing Stability Council December 6, 2019 4% LIHTC Policy
Background Private Activity Tax-Exempt Bonds (PAB) Used for housing, economic development across various agencies and programs At OHCS, PABs used for OBRLP and to allow for allocation of 4% LIHTCs Per IRS rules, projects must finance at least 50% of aggregate basis of land and building with tax-exempt bond proceeds to maximize credit allocation Most projects OHCS funds finance ~55% - 70% with tax-exempt bond proceeds 4% LIHTC Policy
Problem Limited resource - volume cap on PABs limits 4% LIHTCs 4% LIHTCs used with LIFT, PSH, LBB, DRF Metro & Portland Bond expected to lean on this resource as well Unused State allocation goes to carryforward fund, which is then redistributed by Treasury s PAB Committee Since 2009, OHCS received lion s share of this carryforward Carryforward becoming more competitive as other non housing agencies and program utilize PABs Less bond cap available for projects. Projected to be a real concern by 2021 4% LIHTC Policy
Problem 2019 $125M $115M $240M $270M $511M 2020* $250M $84M $334M $306M $413M 2021* $250M $164M $414M $456M $271M OHCS Current Year Allocation OHCS Carryforward Total Allocation Bonds Issued Using PABs* Total Carryforward Available PAB Allocations & Availability * 2020 and 2021 estimated $600,000,000 $400,000,000 $200,000,000 $0 2019 2020 2021 Carryforward Available in CY Bonds Issued Using PAB Total Allocation 4% LIHTC Policy
Recommendation Capping the amount of allocation to any 4% LIHTC project at 55 percent of aggregate basis of the land and building Will allow for continued compliance with IRS requirements Will reduce use of tax-exempt financing by ~15% Some projects will need to fill the gap with taxable debt 4% LIHTC Policy
Questions? 4% LIHTC Policy
