The Importance of Expanding LIHTC to Address Housing Affordability
A nationwide shortage of roughly 1.5 million housing units is making it increasingly difficult for American families to afford to purchase or rent a home. NAHB developed a 10-point housing plan to help tame shelter inflation and ease the housing affordability crisis by removing barriers that hinder the construction of new homes and apartments.
One of the points NAHB advocates for in its plan is the passage of federal tax legislation to expand production of affordable and attainable housing — specifically expanding the Low-Income Housing Tax Credit (LIHTC), which focuses on housing for lower-income households.
“LIHTC is an important program because it’s the only program creating new affordable housing at any significant scale,” stated Steve Lawson, an affordable housing developer from Norfolk, Va., and most recent appointee to the National Housing Endowment’s Board of Trustees. “The LIHTC program has built well over 3.5 million affordable units, but we need more. We need to expand LIHTC dramatically to help alleviate the problem.”
NAHB has been advocating for LIHTC expansion through bipartisan legislation — namely the Affordable Housing Credit Improvement Act. Several key provisions of that bipartisan bill are included in the Tax Relief for American Families and Workers Act, which passed the House in January with NAHB’s strong endorsement, but has not yet been taken up in the Senate.
Lawson chairs The Lawson Companies, which develops, builds and manages affordable housing. The company often partners with non-profits who serve developmentally disabled clients and non-profits who own land to create affordable housing communities such as Seaside Harbor Apartments and Market Height Apartments, which were recognized through NAHB’s Multifamily Pillars of the Industry Awards.
In addition to its development efforts, The Lawson Companies has been active in its state to help establish more resources to create more affordable housing, including:
- Serving on the Rental Advisory Board of Virginia Housing, its state housing finance agency, to help guide policy and tax credit allocations to their highest and best use.
- Participating in an advocacy group to create the Virginia Housing Opportunity Tax Credit program, a state tax credit program that is paired with the federal tax-exempt bonds and 4% tax credits to make more affordable housing feasible.
- Advocating locally for changes in policy that would allow the creation of more affordable housing through tools such as real estate tax abatements, fee and proffer waivers, local housing trust funds, and zoning reform. The Lawson Companies is one of the first developers to work with the city of Richmond on its Affordable Housing Performance Grants, a real estate tax rebate program for affordable housing that includes specific, long-term affordability requirements to continue receiving rebates. Virginia has also created a statewide Housing Trust Fund that promises to bring gap financing to affordable housing developments to make them feasible.
These efforts aim to help increase not only the supply of LIHTC units, but address the shortage of affordable housing options across the board — including workforce housing, which is generally regarded to be between the 60% of area median income (AMI) LIHTC limit and approximately 100% of AMI.
“Most cities’ over-reliance on single-family zoning has restricted the supply of housing for many decades, and demand is increasing because our large, younger generations are aging into their household formation years,” Lawson shared. “We need more housing of all types, especially the more affordable, more dense housing types our younger generations want and need.”
Challenges to increasing supply include restrictive zoning codes, rising construction costs and interest rates, NIMBY-ism, the high cost of regulations, and significant delays in the approval process.
“It now literally takes years — not months — to bring a new building community to market,” Lawson added.
Learn more about how policymakers can help solve these issues at nahb.org/plan.
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