Alabama Low-Income Housing Tax Credit (LIHTC) Program

In our society that is changing so rapidly, every person requires and has the right to have a secure abode. However, many countries are facing affordable housing issues.

    

Access to inexpensive homes has always been a serious concern throughout the Union. The existing real estate environment is rendering the search for affordable homes difficult for low-income earners and families. This happens as property prices rise, hence increasing rents across the nation. It also results in a situation whereby some families have to allocate about 50% of their salaries to rent, something that cannot hold over an extended period of time.

 

States are evaluating different ways to encourage and support affordable housing development for tenants falling in the bracket of low to moderate income. One such state is Alabama. The Department of Housing and Urban Development (HUD) and several local agencies have come together to subsidize affordable housing development in Alabama. In this article, we will understand the workings of affordable housing in Alabama, the eligibility criteria, how to find affordable housing and other important aspects.

What is Affordable Housing in Alabama?   

According to government norms, affordable housing is when rent is not more than 30% of monthly income. This includes spending on rent, utilities, and mortgages. If rent is more than 30% of your monthly wage, you are eligible for many government-run and private programs designed to reduce your rent.

   

Affordable housing units are either private or corporate properties that have reserved a fair share of units as affordable housing for low-income households. The rents on these units are subsidized through different incentive programs, like the LIHTC program. The low-income housing tax credit (LIHTC) program in Alabama is designed to keep the rents affordable for eligible tenants.

 

Program	Alabama Workforce Housing Tax Credit
Administering Agency	Alabama Housing Finance Authority
Enacting Legislation	House Bill 346
Annual State Cap	$5 million; with 20% to 25% going to rural areas.
Transaction Cap	$2 million
Credit Description	Awarded to qualified projects eligible for 4% federal LIHTCs.
Credit Period (Compliance)	10 years.

How is Housing Made Affordable in Alabama?   

The government has launched several programs in Alabama to support and encourage the development of affordable housing in the state. A few of the most notable ones are –

   

1. Tenants with low incomes who can’t afford public housing can get Section 8 vouchers, through which they can claim whatever affordable housing option is available for their income bracket.   
2. The Alabama LIHTC program allows developers to receive tax credits and other subsidies from the government to reserve some units as LIHTC units for eligible tenants.

The Need for LIHTC in Alabama   

Housing credit has a visible impact in Alabama and across the United States. However, much more affordable housing units need to be developed to meet the growing need. 

  

1. There are still 145,998 rentpayers in Alabama who spend more than half their income on rent.   
2. To live in an average one-bedroom apartment in Alabama, a minimum wage worker would have to work 74 hours a week. 
3. According to the Affordable Housing Credit Improvement Act in Alabama, about 8,670 extra cheap housing units could be funded.

 

“In Alabama, the Housing Credit has helped to establish over 53,600 low-cost housing units for families with low incomes, old people, former soldiers, and people affected by disabilities.”

The Impact of LIHTC in Alabama   

As per studies, more than 2400 organizations are supporting the Alabama LIHTC program to solve the rising issue of affordable houses in the state. The program has positively impacted low-income families and the state’s economy. Here are the benefits that the state has experienced with LIHTC – 

  

1. The housing credit has financed over 3.7 million homes for low-income tenants in Alabama since 1986.   
2. Homes developed or preserved – 54,000   
3. Low-income households served – 115,557  
4. Jobs supported for one year – 84,400  
5. Tax revenue generated – $3.307 billion (about $10 per person in the US)  
6. Business income generated – $9.543 billion (about $29 per person in the US)

Eligibility Criteria for Affordable Housing in Alabama   

Eligibility criteria for affordable housing in Alabama are based on the Median Family Income (MFI) of the area. These are the general considerations followed statewide regarding affordable housing eligibility –  

 

1. Tenants with 80% or less MFI fall under the “low-income” tenants bracket.   
2. Tenants with 50% or less MFI fall under the “very low-income” tenants bracket.   
3. Tenants with 30% or less MFI fall under the “extremely low-income” tenants bracket.     

 

Tenants are eligible for which affordable housing options will largely depend on their income level. For states with high rent, tenants can earn more but still be eligible for affordable housing. However, the eligibility will depend on the income scale in Alabama and other states with similar demographics.

How to Obtain Affordable Housing in Alabama?   

Local agencies in Alabama administer the affordable housing program in every city. Here are some considerations for renting affordable housing properties in your area.

 

1. It is important that they keep all their financial records intact to avoid any problems with your LIHTC applications. These may include income tax returns from last year, paychecks or salary slips, or any other papers that could show the household income.  
2. The process of obtaining a LIHTC unit is undoubtedly complex. However, the Alabama Association of Housing and Redevelopment Authorities (AAHRA) is available to help people. This association has a city-wise directory with information about local agencies that will help eligible tenants claim their LIHTC units easily and hassle-free.   
3. Based on the information in the directory, look for properties available for your income bracket and eligibility level. If the directory of your area is not updated, you can search for low-income properties on your own.   
4. While filling out the rent application form, ensure that you bring proof of eligibility for an easier process.

New in Alabama LIHTC – Alabama’s Workforce Housing Tax Credit  

Alabama is taking long steps to address the labor participation rate and workforce shortage in the state through the Workforce Housing Tax Credit. As a part of the “Working for Alabama” program launched in 2024, Governor Kay Ivey took the initiative to raise private capital investment. Initially, the initiative was presented as House Bill 346; on May 9, 2024, Governor Ivey signed it as a law under Act No. 2024-302. This house bill will provide additional support to the Alabama LIHTC program. The Alabama Workforce Housing Tax Credit is coupled with other federal projects that have received 4% LIHTC allocations.

Conclusion   

Increased property value and spiked-up rents do not mean finding affordable rental places to live and call home is impossible. The process is layered and complex but result-worthy. If you fall under the eligibility bracket, you can have your own safe, decent, affordable home in Alabama. You only need to understand the nitty gritty of the Alabama LIHTC program, and your dream home will be yours, all thanks to affordable housing initiatives like LIHTC.