A look at how HFAs and investors are approaching the new LIHTC option.
A new income-averaging option is one of the most significant changes to the low-income housing tax credit (LIHTC) program in years.
The Consolidated Appropriations Act of 2018 established income averaging as a third minimum set-aside election. Income averaging allows LIHTC-qualified units to serve households earning as much as 80% of the area median income (AMI) as long as the average income limit at the property is no more than 60% of the AMI. A project using the income-averaging option must make at least 40% of its units affordable to eligible households.
“Income averaging potentially provides additional tax credit equity to developments that would not otherwise generate tax credits,” says Matthew Rieger, president and CEO of the Housing Trust Group, a Miami-based developer and owner of multifamily housing. “This allows for the construction of communities that would otherwise not be viable.”