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December 28, 2020

Key Tax Credit Provisions Included in COVID-19 Relief Bill

Dear Affordable Housing Colleagues,

Today the President signed a bipartisan, year-end legislative package which will provide significant new resources for affordable housing at a time of increasingly urgent need. The bill includes some of our industry’s most important priorities, including a minimum 4-percent Housing Credit rate and emergency rental assistance.

The legislative package contains three main components: COVID-19 relief, an omnibus appropriations bill, and tax legislation.

Low Income Tax Credit Housing Provisions

The tax component of the package consists primarily of extensions of temporary tax provisions and COVID-19-related business relief, but we are happy to see that a couple of key provisions made it into the final bill, including a minimum 4-percent Housing Credit rate and expanded disaster Housing Credit allocations. We have advocated for years for the 4-percent rate to bolster our tax-exempt bond program, and it is due to this strong bipartisan support that we are here today. The new legislation would:

  • Set a permanent, minimum 4-percent Housing Credit rate, effective for 1) any building which receives an allocation of housing credit dollar amount after December 31, 2020, and (2) in the case of any building any portion of which is financed with an obligation described in section 42(h)(4)(A), any such building if any such obligation which so finances such building is issued after December 31, 2020. Though we and our partners had been urging that the minimum rate apply to any developments placed in service after January 20, 2020, it was determined that new tax policies in this package would generally only apply prospectively.

  • Increase the disaster Housing Credit allocation for areas impacted by natural disasters in 2020. The increase would be equal to $3.50 multiplied by the number of residents in qualified disaster zones and capped at 65 percent of the state’s 2020 credit allocation.

  • Allocate $25 Billion in rental assistance. The rental assistance is available for past due rent, as well as rent going forward for a number of months.

  • Extend the eviction moratorium until January 31, 2021.

The minimum 4% rate is a key provision in the bipartisan Affordable Housing Credit Improvement Act (AHCIA), and gained the support of an additional 103 bipartisan members of the House who signed a letter to leadership in support of the provision this summer.

This minimum 4-percent Housing Credit rate could finance an additional 137,000 affordable homes, according to earlier estimates from Novogradac and Co. and has long been a top priority for the LIHTC Industry. We applaud its inclusion in this year-end legislation.

We at WNC thank all the LIHTC champions in Congress for their persistent support as well as those in the LIHTC industry who worked tirelessly to see this important milestone finally achieved!

Please don’t hesitate to contact us at WNC if you have questions on these or any other matters.

Will Cooper, Jr.
President and CEO