Borrowers and developers in the District are experiencing financing gaps that could delay the delivery of affordable housing projects, the result of an uncertain tax and economic policy climate and a demand for housing tax credits that have fallen nationwide.
To that end, the D.C. Department of Housing and Community Development is developing an action plan to work with affordable housing developers to monitor the impact of Low Income Housing Tax Credits market changes on upcoming projects.
“Nationally, the Bowser administration stands alone in the amount of affordable housing investments it is making through local funding sources such as the Housing Production Trust Fund,” said DHCD Director Polly Donaldson, who believes providing more gap financing from the District’s $100 million Housing Production Trust Fund may help. “The fund not only allows us to produce and preserve more affordable housing in the District, but also helps us find solutions to funding gaps caused by changes in the market and federal policies.”
The federal LIHTC program, created in 1986, is used to finance the construction and rehabilitation of low-income affordable rental housing by offering an investor a reduction in its federal tax liability in exchange for financing needed affordable housing.
Donaldson said that as her agency monitors the current federal policy environment, they are already seeing turmoil in the market, with funding for some projects coming up short.
“So we are soliciting information from developers in our pipeline on whether they are experiencing lost LIHTC equity,” Donaldson said. “Our plan is to help stabilize the District’s real estate housing market by, as necessary, providing developers with more gap financing from the Housing Production Trust Fund. This will ensure that projects stay on track to deliver needed affordable housing in our city.”