Good news for the development of affordable housing, insight from Elyse D. Cherry, February 2021
2020 exposed, yet again, the hazards of our country’s affordable housing shortage, but a change in federal law will give a significant boost to funding affordable housing developments. The new provision, included in the COVID-19 Relief Bill passed in late December, establishes a permanent 4 percent floor under the Affordable Housing Tax Credit. This fix will help close the funding gap for affordable housing developments and provide more predictability and flexibility in affordable housing finance.
The Affordable Housing Tax Credit (also called the Low-Income Housing Tax Credit, or LIHTC) is responsible for funding 90 percent of federally-funded affordable housing construction, and has financed over 3 million affordable homes across the U.S.
Here at BlueHub, we are seeing a growing pipeline of affordable housing projects that are eligible for our financing. The majority of loans we closed in Q4 were in this sector and we expect to see that trend continue into 2021.
More positive news coming out of Washington is President Biden’s pick for Treasury Secretary—Janet Yellen. When she led the Federal Reserve, Yellen met regularly with Community Development Financial Institution (CDFI) industry leaders, often speaking directly about her belief in CDFIs. And back in December before she was sworn in, she said she planned to expand the lending capacity of CDFIs so that we can better serve minority communities.
With the federal government focused both on affordable housing and our CDFI industry, we are looking forward to seeing more progress in the months to come.