Representative Alma Adams (D-NC) and Representative David Rouzer (R-NC) introduced the “LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence Act” (H.R. 7078) – or “LIFELINE Act” – in the House of Representatives on March 15. The NLIHC-supported legislation would remove statutory barriers preventing states, counties, and cities from using Coronavirus State and Local Fiscal Recovery Funds (SLFRF) for affordable housing developments receiving Low-Income Housing Tax Credits (LIHTC). Senator Patrick Leahy (D-VT) is expected to introduce companion legislation in the Senate.
The U.S. Department of the Treasury (Treasury) issued the final rule governing the implementation of the SLFRF program in January 2022 (see Memo, 1/10). While Treasury allows SLFRF funds to be used for affordable housing development, the final rule essentially precludes state and local governments from using SLFRF funds for LIHTC developments. According to the final rule, SLFRF funds must be obligated by December 31, 2024, and expended by December 31, 2026. The 2026 expenditure deadline means SLFRF funds effectively cannot be used as long-term loans to serve as gap financing for LIHTC developments. Instead, the funds must be expended as grants, reducing the “eligible basis” in Housing Credit developments and disincentivizing construction.
The LIFELINE Act – which was drafted in consultation with Treasury, the authorizing committees for SLFRF, and housing stakeholders – would allow SLFRF dollars to be used in the form of loans, as opposed to grants, reducing the eligible cost basis for LIHTC projects. The bipartisan bill would facilitate the use of SLFRF funds by the LIHTC program, enabling states and localities to use the infusion of federal funds to support affordable housing.
“Over 20 states have announced their intention to use SLFRF to ensure that the pipeline of affordable housing units will remain robust,” said Congresswoman Adams. “Our legislation removes the statutory barriers in place, so that cities, counties, and states can use their State and Local Fiscal Recovery Fund dollars to support affordable housing developments. The LIFELINE Act solves another piece of the housing puzzle and brings us closer to a future where every American family can afford a decent and affordable place to live.”
More than 80 organizations joined an effort led by the National Council of State Housing Agencies (NCSHA) to urge Congress to allow SLFRF funds to be used for long-term loans to LIHTC developments. In a letter sent to congressional leadership on February 28, NCSHA explained that Treasury’s final rule makes it difficult and sometimes impossible to structure SLFRF funds in an LIHTC development.
Read the text of the bill at: https://bit.ly/3u5odcr
Read the press release announcing the legislation at: https://bit.ly/3IlZZzI
Watch a video announcing the legislation at: https://bit.ly/3wclEI9
