This Is A Member-Only Page Government's roll in housing was limited to local poor farms, orphanages and veterans homes until the 1929 bank failures. Now government is directly involved in almost all low-income housing in the country. We have provided a brief history of the Federal Government involvement in low-income housing and a chronology of Federal Housing Acts elsewhere in the RHOL site. Low Income Housing Tax Credit (LIHTC) The 1986 tax reform act took away most incentives for investing in low-income rental housing by changing depreciation from fifteen to twenty seven and a half years. Many investment analysis professionals concluded that the act reduced the value of new investments in rental housing by about eighteen percent.
The feds responded by creating temporary Low-Income Housing Tax Credits to soften the effects on new or rehabilitated low-income housing. Essentially the act allows investors in properly set-up and registered low-income projects to take nine percent a year of their adjusted basis as a tax credit. Investors receive the annual credit of up to their tax bracket times $25,000. The credit must be spread out over 11 years. It results in about a seventy percent recapture of investment over that period. The Low Income Housing Tax Credit also provided a vehicle through which conventional financing agencies and the Federal Home Loan Bank can participate in the production and/or rehabilitation of multifamily units for occupancy by low income households.
In 1993 the Omnibus Budget Reconciliation act made the Low-Income Housing Tax Credit program a permanent part of the Federal Tax Code. This permanency led to more active involvement by both individual and corporate investors. That increased the market demand for the credits which are now often sold to raise equity capital for housing projects. In fact, the price that investors pay for the credits is now twenty eight percent higher because permanence has attracted more investor competition. The result has been more money available to fill the "cost Vs value" gap that exists in providing decent, safe affordable housing for low and moderate income tenants.
We have also provided a page of answers to FAQs about the Federal Low-Income Housing Tax Credit program. Return to top Historic Building Renovation Tax Credit Program. Owners and renovators of historic properties may qualify for tax credits of 20% of the renovation costs when a building is remodeled preserving the existing historic architecture. To qualify the project must be certified as a historic structure, defined as:
- In general the term ''certified historic structure'' means any building (and its structural components) which (a) is listed in the National Register, or (b) is located in a registered historic district and is certified by the Secretary of the Interior to the Secretary as being of historic significance to the district.
A Registered historic district, defined as:
- (a) any district listed in the National Register, and (b) any district - (I) which is designated under a statute of the appropriate State or local government, if such statute is certified by the Secretary of the Interior to the Secretary as containing criteria which will substantially achieve the purpose of preserving and rehabilitating buildings of historic significance to the district, and (II) which is certified by the Secretary of the Interior to the Secretary as meeting substantially all of the requirements for the listing of districts in the National Register.
Certification is sometimes a complex and time consuming process involving plenty of government paperwork, but in many cases the tax credits that are available is the only thing that makes such projects economically viable.
Return to top Housing Subsidy Program Administrators
Low-income renter households are assisted primarily through housing programs administered by the U.S. Department of Housing and Urban Development (HUD), public housing authorities (HP), State Housing Development Authorities, and the Farmers Home Administration (FmHA). An overview of the rental housing programs available and their financing mechanisms is presented below.
U.S. Department of Housing and Urban Development:
This federal agency administers the majority of multifamily programs for rental housing and cooperatives. Financing mechanisms include below market interest rate end loans, direct loans for new construction and rehabilitation, direct rent subsidies and mortgage insurance. HUD multifamily and subsidy programs covered in this Directory are Section 221(d)3, 221(d)4, Section 202, Section 8, Section 236, Section 231, Rent Supplement and Rental Assistance
payments.
Public Housing Authorities:
Public housing agencies, also known as authorities or commissions, are established by municipalities to develop, own, and operate low-income public housing projects, financed through the sale of tax-exempt obligations. HUD offers financial assistance as well as technical and professional assistance in the planning, development, and management of projects.
State Housing Development Authorities:
Established by State Legislature's but often financed through the sale of tax-exempt bonds and notes to the private sector, the Authorities offer permanent mortgage financing and, in some cases, construction loans at below-market rates for rental housing developments. Most units are federally subsidized through either the Section 236 mortgage reduction program, the Section 8 rent subsidy program, or Low Income Housing Tax Credit, in conjunction with State Taxable Bond Programs. The Authorities also subsidize either 20% or 30% of units produced under the Direct Loan 80/20 or 70/30 Programs.
Farmers Home Administration:
A federal agency, established to finance housing in rural areas, which are defined as cities of rural character with populations up to 10,000 and cities of up to 20,000 population located outside Standard Metropolitan Statistical Areas. The primary financing mechanism to supply multifamily rental units is the Section 515 below market interest rate housing program. In recent years, Farm Home has also utilized the Section 8 assistance program, in conjunction with Section 515 loans. Farm Home has also been active in using the Low Income Housing Tax Credit in conjunction with the Section 515 Program.
Proposed Programs and Legislation: THE EFFECT ON HOUSING PROGRAMS FROM BUDGET RESOLUTIONS:
(Nov. 1995) The U.S. Senate and the House of Representatives adopted separate resolutions to balance the federal budget by fiscal year 2002. Differences were to be resolved during conference. Both the House and Senate would reduce or eliminate some of the subsidies provided under various housing programs. THE FEDERAL HOME LOAN BANKS:
Changes in the institutional environment for residential mortgage lending have led to a major rethinking of the Federal Home Loan Banks. Pending legislation would reform the system's structure, establish the mission in law, overhaul membership, and use requirements, and modify certain contributions the system makes to federal deposit insurance. HOUSING THE OLDER PERSONS ACT OF 1995: H.R. 660
The Fair Housing Act Amendments of 1988 made it unlawful to discriminate in any type of real estate transaction against persons based on familial status or handicap. In 1994, the Department of Housing and Urban Development (HUD) proposed a rule which would determine whether or not a project occupied by senior citizens would be exempt from the law. The proposal was met with negative responses from many elderly advocacy groups prompting congressional response. This bill modifies the requirements for exemption from the proposed rule and protects real estate agents of such housing from monetary retribution where compliance is attempted in good faith.
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