Since 1986, the federal government has used low-income housing tax credits (LIHTC) to indirectly subsidize the development of affordable housing. The credit are allocated to state and local governments, and subsequently awarded to low-income housing developers. The tax credits are sold to investors, and developers use the money to fund their projects. By reducing the amount of money they have to borrow, developers can significantly reduce the rental or purchase price of each residential unit.
The Louisiana Housing Finance Agency recently released a memo outlining its intent to make additional tax credit money available to current development projects. Approximately $ 36 million has been allocated by the Agency for this purpose.
The additional money was allocated for the purpose of helping developers and investors pay for increased costs associated with existing LIHTC projects. Only those who received LIHTC between October 1, 2006 and September 30, 2009 qualify for the additional money. Additional monies are capped at $ 1 million per project.
Applications for additional funding were due to the Louisiana Housing Finance Agency late last summer. Each application was ranked based on a pre-determined scoring system, and rankings were posted in the fall. Application submissions had to include an updated, certified AMEC model, detailed list of costs that would have covered with additional funding, and agreement that the developer fee will remain unchanged, regardless of any additional monies received.
By offering additional tax credits, Louisiana bought to ensure the completion of projects that had already been started. There is no indication yet whether additional credits will be made available this year, or if other states will follow Louisiana's example.