Tax Incentive Programs for Affordable Housing

LOW-INCOME HOUSING TAX CREDIT (LIHTC) PROGRAM

The LIHTC Program is a tax incentive intended to increase the availability of low-income rental housing. The tax credit is a credit against regular tax liability for investments in affordable housing properties constructed, acquired and rehabilitated after 1986.

The LIHTC is designed to subsidize either 30% or 70% of the costs in a low-income unit rental project. The 30% subsidy, commonly called the “automatic 4% tax credit,” is for new construction that includes additional subsidies or that can be used for the acquisition cost of existing buildings. The 70% subsidy, or “9% tax credit,” supports new construction that does not include any additional federal subsidies.

HOME PROGRAM

The Rental Housing Development (Multifamily) HOME Rental Housing Program provides loans to affordable housing developers to build, buy or rehabilitate affordable housing and provides direct rental assistance to low-income individuals.

The list below reflects eligible uses of HOME funds and does not necessarily reflect currently available programs:

COMMUNITY DEVELOPMENT BLOCK GRANTS

The Community Development Block Grant (CDBG) is a flexible program that provides communities with resources to address a wide range of unique community development needs. The CDBG program works to ensure decent affordable housing, to provide services to the most vulnerable in our communities, and to create jobs through the expansion and retention of businesses.

The annual CDBG appropriation is allocated between states and local jurisdictions called “non-entitlement” and “entitlement” communities, respectively. Entitlement communities are comprised of central cities of Metropolitan Statistical Areas (MSAs); metropolitan cities with populations of at least 50,000; and qualified urban counties with a population of 200,000 or more (excluding the populations of entitlement cities). States distribute CDBG funds to non-entitlement localities not qualified as entitlement communities.

MULTIFAMILY REVENUE BONDS

The Louisiana Housing Corporation (LHC), through the issuance of Multifamily Revenue Bonds, provides financing to developers to acquire, construct and/or rehabilitate affordable housing for low to moderate income families and individuals.

Housing Projects that are financed (whether new construction or acquisition/rehab) in part by federal subsidies (i.e. volume cap bonds) are eligible for 4% tax credits only. There is no “limited pool” for the 4% tax credit as there is the 9% credit. To obtain the 4% tax credit, a partnership must apply for an allocation of private activity bonds, which if received, allows for a non-competitive application process for the 4% tax credit.

CHAAP

The LHC offers the CHDO Annual Awards Program (CHAAP). Rental development funds may be used to pay eligible costs associated with the development of permanent multifamily housing. The units may be either new construction or involve acquisition with rehabilitation or reconstruction. The project can have up to four units.

OPPORTUNITY ZONES

An Opportunity Zone (OZ) is an economically-distressed community where federal tax incentives may be available for new investments. Established by Congress as part of the 2017 Tax Cuts and Jobs Act, the Opportunity Zone Program aims to increase investment and revitalize communities. Since most of this program is in private hands, the program offers a simple way to reinvest capital gains into distressed communities through Opportunity Funds. There are 150 federally designated OZs in Louisiana – 44 of them are in our 10-parish region, extending from Convent to Destrehan and Metairie as well as the Northshore.


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