The president signed a fiscal year (FY) 2018 omnibus spending package into law at the end of March with provisions, taken from the Affordable Housing Credit Improvement Act (S. 548/H.R. 1661), that will strengthen and expand the Low-Income Housing Tax Credit (Housing Credit). The omnibus authorizes a 12.5 percent increase in Housing Credit allocation for four years (2018-2021) and allows income averaging in Housing Credit properties on a permanent basis. Novogradac and Co. estimates that this temporary expansion will increase affordable housing production by approximately 28,400 rental homes over the next decade.
This is the first expansion of the Housing Credit in ten years and was championed by Senator Maria Cantwell (D-WA), the lead sponsor of the Affordable Housing Credit Improvement Act (S. 548). Senator Cantwell points out that “the increase couldn’t come at a better time. This down payment will help us deal with the tremendous deficit we have in affordable housing.” While the temporary 12.5 percent increase will not fully make up for the projected loss of Housing Credit production that is resulting as an indirect effect of the reduction of the corporate tax rate enacted in the Tax Cuts and Jobs Act, it is a very significant first step and offers an important down payment on the nationwide shortage of affordable rental housing. The ACTION Campaign released a statement thanking Congress for including these provisions in the omnibus and expressed continued commitment to advancing the remaining provisions in the Affordable Housing Credit Improvement Act.