The recent passage of the 2018 omnibus spending bill included some positive changes for the affordable housing community. In addition to funding the Federal Government for the remainder of the 2018 fiscal year, the bill increased Low Income Housing Tax Credit (LIHTC) allocations, HUD funding and RAD unit caps. This is good news for the providers and advocates of affordable housing, who will be directly impacted by several measures, including:
LOW INCOME HOUSING TAX CREDITS (LIHTC)
LIHTC allocation will increase by 12.5% every year for four years. This provision, championed by Sen. Maria Cantwell, will help offset some of the impact that the 2017 Tax Cuts and Job Act inflicted on LIHTC resources. Additionally, a permanent income averaging option was created that permits developments to accept tenants with higher than average median incomes.
RENTAL ASSISTANCE DEMONSTRATION (RAD)
The bipartisan budget agreement allows a 10% funding increase for HUD over FY 2017. This budgetary increase will impact a number of HUD’s critical programs, including public housing, CDBG Block Grants and HOME programs.
The bill raised the cap to 455,000 units and expanded eligibility requirements by including 202 Project Rental Assistance Contract (PRAC) properties. The bill also extends RAD by four years until 2024.
Love Funding’s team of affordable housing finance experts has extensive experience with the RAD program, structuring complex HUD-insured loans involving LIHTCs and navigating the complex financing details of your transaction.