Copyright: Struvictory
The Government Accountability Office (GAO) released a report on June 8 that assesses how well state and local allocating agencies administer the Low-Income Housing Tax Credit (LIHTC) program. The watchdog found that while the agencies generally meet requirements for allocating credits, certain practices prompted concerns. Most notably, GAO concluded that over half of qualified allocation plans failed to explicitly mention all selection criteria mandated by the tax code.
GAO also raised concerns that although allocating agencies notified local governments about projects, some required support letters from those jurisdictions. HUD believes such a requirement could violate fair housing laws as the letters could influence the location of affordable housing in a discriminatory manner. Finally, GAO indicated that because the Internal Revenue Service (IRS) provides discretion to state and local agencies in reporting non-compliance, reports are inconsistently provided.
To make its assessment, GAO analyzed the nation’s 58 state and local agencies - from 50 states, U.S. territories, New York City, and Chicago - that receive LIHTC allocations that they award to developers seeking to build affordable housing in their jurisdictions. Additionally, GAO reprised a recommendation made in July 2015 that HUD and the IRS jointly oversee LIHTC.
As a steering committee member of the Affordable Rental Housing coalition, NMHC joined other members to oppose GAO’s recommendation. In a July 2015 letter to key congressional stakeholders, the coalition said: “HUD has no experience in administering the Housing Credit program and little capacity to take on this responsibility. If necessary, the common sense solution would be to provide more resources to the IRS to increase oversight.”
NMHC/NAA have long been strong supporters of the LIHTC program. For example, we are currently supporting legislation introduced by Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) that would expand allocation authority by 50 percent, enable income averaging, and set a minimum 4 percent credit for acquisitions and bond-financed developments.
