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Major Provisions in the New Hosing and Mortgage Foreclosure Package Will Benefit Housing for Consumers
August 6, 2008
On July 30, President Bush signed HR 3221, the Housing and Economic Recovery Act of 2008. The bill is now known as Public Law 110-289. As noted in a July 29 E-News message, this legislation includes a new Housing Trust Fund to spur investment in affordable rental housing for extremely low-income households, including individuals living on Supplemental Security Income (SSI).
Click here to the July 29 E-News and analysis of the new Housing Trust Fund.
As created in the bill, the Housing Trust Fund is a permanent program with a dedicated source of funding not subject to the annual appropriations process. At least 90% of the funds must be used for the production, preservation, rehabilitation, or operation of rental housing. Up to 10% can be used for first-time homebuyers’ activities. At least 75% of the funds used for rental housing must benefit extremely low income households and all funds must benefit very low income households.
In addition the new law includes a number of important changes to Section 8 Project-Based Voucher and Low-Income Housing Tax Credit (LIHTC) programs. These changes are designed to allow the LIHTC to coordinate more effectively with other programs, including Section 811, to foster development of more supportive housing units. For example, the new law increases the amount of tax credits allocated to states in 2008 and 2009. For states that receive per capita allocations, the allocations would go up by $0.20 per capita. This amounts to an increase of 10 percent in 2008, and just under 10 percent in 2009. The new law also increases the minimum allocations provided to small states by 10 percent in both years.
Importantly for projects seeking to make rents affordable for the lowest-income tenants (such as individuals living on SSI), the new law increases the amount of tax credit that can be provided per unit and allows credits to be used more easily with other forms of federal housing assistance. One such provision allows states to provide "basis boosts" increasing credit amounts by 30 percent for projects (excluding bond financed projects receiving 4 percent credits) outside the limited areas -- "Qualified Census Tracts" and "Difficult Development Areas" -- where the boosts are now permitted. The new law also provides that the full range of federal rent and operating subsidies can be combined with tax credits without reducing the credit amount. It will also eliminate a prohibition on using tax credits in projects receiving Section 8 Mod Rehab assistance. For a full summary of the bill's LIHTC and multifamily bond provisions, click here.
For "project-based" vouchers, the new law includes changes to existing requirements that will make it easier for PHAs and owners to use the PBV option to provide affordable rental opportunities in mixed income settings.