The space between affordable and market rate housing development can be a lonely one. Affordable projects can participate in tax-credit, supplemental grants, and Section 8 housing assistance programs; market rate deals often generate sufficient income to support a simplified capital stack of debt and equity. Middle-income, or workforce housing projects typically don’t qualify for tax-credits and don’t generate enough income to support a feasible amount of debt. Where to go?
Congress may have the answer; that is not a misprint! The Workforce Housing Tax Credit Act, proposed bipartisan legislation, would mirror existing Low Income Housing Tax Credit (LIHTC) programs and authorize state housing agencies to allocate tax-credits for “middle-income” projects through a competitive process.
To qualify for the credit, at least 60% of a project’s units must be occupied by individuals with incomes at 100% or less of the area median income (AMI), with rents restricted to 30% of the designated income.
Credits would be allocated in 2024 based on a state’s population beginning at $1.00 per capita with a minimum of $1,500,000 for small states. The tax credits would be provided to developers over a 15-year period, with a 15-year compliance period and 30-year extended commitment.
Projects can use a combination of low-income and workforce housing tax credits in a single project, as long as at least 20% of the total units are middle-income.
Please contact us if you would like additional information about this exciting legislation.