| On March 23, 2018, President Trump signed into law the Fiscal Year 2018 Omnibus Spending Bill. This important legislation included two key provisions that were supported by CHFA as opportunities to strengthen and expand the Low Income Housing Tax Credit (LIHTC) program. The following is a brief summary of these provisions and a status update with respect to CHFA’s review and implementation of each.
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Masouda Omar or
Housing Credit Increase:
Summary: The Omnibus authorized a 12.5 percent increase in state Housing Credit authority for four years beginning in 2018 (2018-2021). In each of those years, the per capita amount and small state minimum that otherwise would have been in effect would be multiplied by 1.125.
Status: Colorado is estimated to receive an additional $1.8 million in 9 percent tax credit authority for awards starting in 2018. Given that CHFA forward-reserves credit, both the 2018 and 2019 increase will be available for reservation as part of CHFA’s upcoming 9 percent allocation round (Round Two 2018), resulting in an estimated total of $16.6 million in annual LIHTC authority available. Application information is available in
CHFA’s Qualified Allocation Plan.
Summary: The Omnibus permanently establishes a new minimum set-aside election option for Housing Credit developments. Specifically, rather than committing to either 40 percent of units limited to 60 percent of area median income (AMI) or 20 percent of units limited to 50 percent of AMI, developers would have a third option, allowing Credit-qualified units to serve households earning as much as 80 percent of AMI, so long as the average income limit in the property is 60 percent or less of AMI. Developers would have to commit to having at least 40 percent of the units in the property affordable to eligible households. The 80 percent of AMI standard is consistent with long-standing federal affordable housing policies, which define “low income” as households earning no more than 80 percent of AMI. Under the income averaging option, the higher rents that households with incomes in the 61-80 percent of AMI range could pay would have the potential to offset the lower rents for extremely low- and very low-income households living in the property, thereby allowing developments to maintain financial feasibility while providing a deeper level of affordability than is currently possible without other subsidies. Income averaging would thus preserve rigorous targeting to low-income households, while providing more flexibility and greater income-mixing potential.
Status: CHFA is awaiting further guidance from the U.S. Department of Treasury and IRS prior to releasing detailed implementation procedures and an effective date for this provision. As such, CHFA is not currently accepting applications for income averaging in either 9 percent or 4 percent LIHTC applications.
CHFA is very supportive of the opportunity to more effectively serve Colorado’s growing housing needs though income averaging. At the same time, we want to ensure that any new procedures are consistent and in accordance with federal regulation. CHFA has formed an internal working group to evaluate information as it becomes available and to assist in crafting guidance for implementation in Colorado.
CHFA recognizes the strong interest from the affordable housing community regarding this new opportunity and will be providing regular updates to our stakeholders as more details become available.
To learn more about income-averaging, we recommend the following resources that have been prepared by the National Council of State Housing Agencies (NCSHA) and Novogradac and Company.