Exchange Plan In House Recovery Bill Offers Best Fix For Low-Income Housing Tax Credit: Adding Option to Trade In “4 Percent” Credits Would Further Strengthen Credit’s Stimulative Impact

Source: Will Fischer, Center on Budget and Policy Priorities, February 2, 2009

The economic downturn has sharply reduced the effectiveness of the Low-Income Housing Tax Credit, the nation’s primary subsidy for development of affordable rental housing.  Faced with lower profits and reduced access to capital, fewer corporations are willing to invest in affordable housing in exchange for the credits.  As result, the LIHTC is supporting far less construction and rehabilitation of affordable housing and creating far fewer jobs than it has in the past.  This is occurring at a time when the number of homeless families is rising and the already extensive need for affordable rental housing is likely to grow.

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