New York Housing Conference urges Congress to establish a fixed rate for the 4% Low Income Housing Tax Credit (LIHTC) to make up for Covid-related economic losses and help spur production of needed affordable housing.
The need for affordable housing is greater than ever. However, low federal borrowing rates have reduced the value of 4% LIHTC to a historic low of 3.07%, which reduces funding – in the form of equity – in affordable projects. The low rates reduced affordable housing equity in New York alone by $51 million compared to last year.
However, if the 4 percent rate had been fixed this year affordable housing projects in New York would have raised an additional $240 million in equity instead of losing $51 million in equity, helping to finance 1,700 affordable units in New York City. A fixed rate will help 4% LIHTC be a countercyclical tool for housing investment, providing consistent equity even when interest rates decline to respond to a recession.
This simple change would serve as precisely the economic stimulant New York needs right now. Now is the time to act! Congress must pass the 4% fix in the 2020 tax extenders!