The Government Accountability Office (GAO) recently released a report entitled “Low-Income Housing Tax Credits: Agencies Implemented Changes Enacted in 2008, but Project Data Collection Could Be Improved” which examines the implementation of changes to the Low-Income Housing Tax Credit (LIHTC) program which occurred under the Housing and Economic Recovery Act (HERA) of 2008. As part of HERA, Congress made changes to the program that included increasing credits allocated to states, setting a temporary floor on the most common LIHTC rate (the portion of eligible project costs for which a developer can receive credits), and giving HFAs more discretion in “enhancing” (i.e., increasing) awards. HERA also directed GAO to study these changes to see if they contributed to an increased number of affordable housing tax credit properties.
GAO found that while HERA’s broad effects on the LIHTC program are difficult to measure, in general program stakeholders believe that there has been a temporary increase in per capita credit allocations. The report notes that the temporary increase to the credit floor and the discretion given to use enhanced credits seems to also have improved the financial viability of many projects.
The GAO report also found that several federal and state agencies have made significant changes to program guidance in order to accommodate provisions within HERA. For instance, the Internal Revenue Service (IRS) has issued notices and revenue procedures to accommodate guidance on changes within HERA and several state housing finance agencies (HFAs) have modified qualified allocation plans (QAPs) and eligibility requirements therein. That being said, GAO also found that a few federal and state agencies were still working on implementation provisions within HERA as of October 2012.
Finally, GAO’s report notes that HUD’s LIHTC project database in general seems to include incomplete information about project characteristics between 2006 and 2010. The agency notes that without more complete data on the LIHTC program, the federal government’s ability to evaluate basic program outcomes””such as how much housing was produced””and overall federal efforts to provide affordable housing may suffer.
Click here to read the GAO report.