The Low Income Housing Tax Credit (LIHTC) program creates more than $8 billion per year to develop and rehabilitate affordable housing units. According to the United States Department of Housing and Urban Development, LIHTC is the most important resource for creating affordable housing in the United States today. More than 2.7 million affordable housing units have been developed over the past 30 years though LIHTC. However, there is uncertainty about the continued success of the program. Potential changes to income tax law are delaying affordable housing projects currently in development, and projects in the planning phase are suddenly challenged with budget shortfalls. History of LIHTC The LIHTC program was signed into law in 1987 and is monitored by the Internal Revenue Service. Housing finance agencies in all 50 states oversee the daily administration of the program. LIHTC differs from the approach the federal government takes towards other housing programs. Instead of using federal funds to build and manage housing resources across the county, the LIHTC program gives states, investors, and affordable housing advocates the ability to plan, finance and build projects that best fit their local needs. Nonprofit housing developers acquire tax credits from their state housing finance agencies based on a competitive process. States award credits to projects they deem most valuable based on pre-defined criteria. Awarded non-profits then turn around and sell tax credits to private investors such as banks and corporations. Those investors save on their annual tax bill and nonprofits raise capital to build housing. It’s a win-win for all. Future Uncertainty Because the sale of tax credits is a bidding process, prices are based on the need for investors to reduce their tax burden. If that need is reduced through tax reform, then there is less competition for tax...

After several years of reporting housing shortages and funding restrictions, there is a break in the clouds for affordable and Low-Income Housing Tax Credit (LIHTC) housing. The respite could not have come at a better time, other than sooner. The National Low-Income Housing Coalition recently released its 2016 report. The nation faces a shortage of 7.2 million affordable housing and available rental units. That means that there are only 31 affordable and available rental units for every 100 eligible households. Of those that can find housing, one in four spend more than 50 percent of their monthly income on rent. Those figures only partially influence the increase in available funding for the sector. Borrowers are now seeing an increase as banks loosen their purse strings to honor Community Reinvestment Act requirements. In 2015, Fannie Mae reported a total lending volume of $42.3 billion for affordable projects. Changes in product offerings are partially responsible for the increase in competitive loans. One new product is the Reduced Occupancy Affordable Rehab (ROAR). ROAR allows Frannie Mae to extend financing for qualified affordable housing properties in need of renovations, eliminating the need for a construction loan. Across the U.S., newfound funding is helping some companies expand their services. Affordable Housing News reports that the National Development Council Corporate Equity Fund (NDC CEF), for example, has raised $70 million for its fully specified Fund XII. The organization can now expand its products to include investment and low-income communities. With the funding, NCD CEF launched 12 LIHTC projects. The projects will include affordable housing for families, the elderly, those with special needs, and residents who require consistent assistance. The good news continues as Congress re-examines the cap on LIHTC. According to an article in Affordable Housing Finance, Sen. Maria Cantwell...

The U.S. Department of Housing and Urban Development (HUD) granted $1.8 billion to public housing authorities throughout the nation. The funds will allow properties to make major renovations to existing properties that improve habitability andsustainability. The grant falls woefully short of the estimated $25.6 billion needed to bring the nation’s 1.1 million public housing units up to par. The inadequate award signals the continuation of the affordable housing crisis. Each state and many US territories received Capital Fund Programs grants to construct, repair, and renovate public housing communities. Projects range from necessary structural repairs to upgrades that improve sustainability and the cost-effectiveness of the properties. The Capital Needs in the Public Housing Program suggests that the nation’s 3,100 public housing authorities will require nearly 12 times the awarded amount to make units “decent and economically sustainable.” The recent award follows a string of budget cuts to HUD, USDA Rural Development, and other affordability-centered programs. The President’s proposed FY 2015 budget outlines further cuts. HUD is estimated to lose $32.6 billion. The lack of funding adds to a continuing concern over the affordable housing crisis. Across the board, the nation’s lowest-income members encounter mounting barriers to housing. National Low-Income Housing Coalition’s  (NLIHC) “Out of Reach” report concludes that there are only 31 affordable housing units for every 100 families in need; Urban Institute states that for every 100 extremely low-income (ELI) renter households, there are only 29 affordable and available rental units. Not a single county in the nation has reached equilibrium between ELI households and available affordable housing. While a lack of available units is part of the problem, it isn’t the sole concern. Even with units available, some families cannot obtain the assistance needed to move in. According to the Center for American Progress,...

The Securities and Exchange Commission has proposed rules that would permit small companies to seek funding from the general public. Crowdfunding has grown in popularity among artists and inventors. Companies that create home security gadgets, tiny appliances for micro-apartments and sustainable furniture have all received public funding via platforms like Kickstarter. If the proposed rules pass, fledgling housing industry companies can get their businesses off of the ground with the help of the upper middle class. Under the new rules, companies could raise as much as $1 million each year from the public. Shares can be sold in face-to-face transactions and through online funding portals, similar to Indiegogo and Wefunder but with more stringent regulations. Such opportunities could help small companies gain quick access to capital, increasing the success rate of startups. For Startups The new source of funding couldn’t come at a better time. As the nation recovers from the recession, many are regaining the confidence needed to step out and fulfill their entrepreneurial goals. They can’t afford to vie for the generosity of a few accredited investors, entities whose net income exceeds $1 million. Startups are looking for more easily accessible investors and they are in luck. Many Americans, eager to shrug off recession woes, are seeking new ways to make their money grow. The time is ripe to unite these entrepreneurs and new investors. The proposed changes are not an entirely new idea. The JOBS Act outlined regulatory guidelines that paved the way for crowdfunding. The act also forged the trail for funding portals, third-party internet-based platforms for offering and selling shares. These portals will not be registered as brokers, nor can they offer insights or suggestions on investing.  They operate without SEC approval. This is great news for businesses hoping...