WASHINGTON, D.C. – Today, U.S. Sen. Sherrod Brown (D-OH) announced that he is co-sponsoring legislation that would extend and enhance the Low-Income Housing Tax Credit (LIHTC) to help Ohioans build affordable housing developments and create jobs. The bill would extend the nine percent minimum credit for the construction or substantial rehabilitation of property, and establish a four percent minimum credit for acquisition of existing housing.
“The Low-Income Housing Tax Credit is the country’s most successful affordable housing program. It finances approximately 90 percent of all affordable housing developments nationwide.” Brown said. “All across Ohio the credit is making a difference. From Lucas County, where it provided the capital to build Lakewoods, a 48-home complex for low-income seniors; to Cuyahoga County, where the credit funded the redevelopment of historic Cogswell Hall. These are just two of many examples of the impact the program has made.”
The LIHTC provides tax credits to affordable housing developments that use them to attract private equity capital to help finance the properties. The LIHTC provides two kinds of credits – one for 70 percent of the cost (in present value) of constructing or substantially rehabilitating property, and one for 30 percent of the cost (in present value) of acquiring existing property. The higher the rate, the more attractive the credits, and the more capital Ohio can attract.
Unless Congress acts to lock-in these rates, the Internal Revenue Service (IRS) would automatically decrease the minimum rate for the housing credit. This would reduce the number of LIHTC projects by limiting access to capital. This bill will establish a floor for the credit rates, which will protect this critical tool for Ohio’s housing market.