We are excited to share that another of our top priorities has made it into the updated Build Back Better bill released this afternoon, which will help to significantly expand affordable housing supply in New York. The amended bill reduces the 50% bond financing requirement to 25% for the 4% LIHTC for years 2022, 2023, 2024, 2025 and 2026. This will give an enormous boost to production!
It also extends the temporary 12.5% increase to the 9% credit which was set to expire this year and increases the allocation by 10% plus inflation for 2022, 2023 and 2024. In 2025, it reverts to the 2017 baseline, adjusted for inflation. The LIHTC provisions also include language that limit the use of qualified contracts and address issues with the right of first refusal (ROFR) to protect nonprofit developers in these projects, both of which were top priorities for us and many of our partners. We are extremely grateful to Senate Majority Leader Schumer who was responsive to our concerns and fought on behalf of NY for LIHTC expansion!
The updated bill also includes new language to make sure new rental vouchers go further. Originally, the bill phased in vouchers over 5 years while funding them for a full 10 years. This would have allowed renewal costs to eat up a significant portion of the investment, limiting the total number of vouchers that could be issued. We joined national advocates to recommend a 6 year funding period, which would have more than doubled the total number of vouchers that could be issued. Though we did not get our full ask, this bill decreases the funding period to 8 years, which will make the vouchers go significantly further. We thank our partners who joined us to raise these concerns to the House Financial Services Committee members, we will release further analysis on vouchers shortly.
The revised bill also include the Neighborhood Homes Tax Credit to encourage the rehabilitation of deteriorated homes in distressed neighborhoods for affordable homeownership and increases to several HUD programs. See more details and analysis by Novogradac here.