District of Columbia (DC) Low-Income Housing Tax Credit (LIHTC) Program

The DC LIHTC Program is a significant effort to increase the availability of affordable housing in Washington, DC. It augments the federal LIHTC with state-specific tax credits, making it even more attractive to develop and preserve affordable apartments in DC and other places in the region. The program closes financial gaps for developers and allows for income-based apartments to be constructed in DC for low—and moderate-income families.

One pressing issue with affordable housing in the District of Columbia is that its costs, in most situations, exceed what many residents can afford. Through the LIHTC program, low-income apartments are allowed to stay within reach of these inhabitants in Washington, DC

What is the DC LIHTC Program?

The DC Low-Income Housing Tax Credit (LIHTC) Program was created under DC Code § 47-4801 et seq. to provide financial incentives for developers building or rehabilitating low-income apartments in Washington, DC. The program acts as a “gap filler,” supplementing federal LIHTC allocations to encourage affordable housing development in the DC area.

Through its partnerships with private investors and developers, the program facilitates the development of income-restricted apartments in DC. It guarantees that the units will remain affordable for at least 30 years. This effort addresses the severe deficit of affordable living in Washington, DC, by stimulating investment in areas that require it the most.

Who is Eligible for DC LIHTC?

Eligibility to the DC LIHTC program ensures that resources go only to projects that meet the District’s affordability challenges. The developers and projects shall qualify by meeting any of the following criteria:

Federal LIHTC Allocation: The projects should have been allocated with federal LIHTCs under Section 42(h)(1) or Section 42(h)(4) of the Internal Revenue Code after October 1, 2021.

Project Size: Developments should contain at least five rental housing units.

Affordability Standards: Units shall be affordable to households earning not more than 80% of the Median Family Income (MFI) for the Washington Metropolitan Statistical Area.

Extended Use Commitment: To ensure sustainable income-based apartments in Washington, DC, projects should meet affordability requirements for a minimum of 30 years.

Such requirements on LIHTC eligibility highlight the importance of the program’s mission regarding DC housing for low-income populations, providing affordable housing options based on income in DC neighborhoods.

How Does DC LIHTC Assist Developers

The DC LIHTC program grants developers tax credits equivalent to up to 25% of the value of the federal LIHTC allocation. These credits are disbursed over 10 years, providing long-term financial benefits that make affordable apartments in DC feasible.

Annual Allocation Caps: It starts at $7.8 million credits in FY 2024 and increases by 5% annually.

Transferability: A developer may sell, assign, or transfer credits to equity investors to guarantee that ambitious projects, such as a new affordable apartment complex, can attract the funding needed to run their activities.

This funding model is an anchor that has created and maintained affordable apartments for low-income residents of Washington, DC while allowing them to keep their other original units.

LIHTC Allocation in District of Columbia (DC)

Type of LIHTC	Application Process	Eligibility
4% LIHTC Projects	Submit Form 202 with the DC LIHTC Tab completed to DHCD via DCHFA in conjunction with the Stage 1 application submission to DCHFA.	DCHFA will conduct an initial eligibility review and forward the findings to DHCD for final assessment.
4% LIHTC Projects + Other Gap Funding	Application must be submitted to DHCD as part of the Consolidated RFP process. Ensure the DC LIHTC section of the application is completed accurately.	DHCD will review eligibility as part of the overall Consolidated RFP evaluation, focusing on compliance with funding and affordability requirements.
9% LIHTC Projects	Submit the application directly to DHCD as part of the Consolidated RFP process. For non-RFP submissions, include the DC LIHTC application alongside the federal LIHTC request.	DHCD will verify eligibility upon the project’s inclusion in their pipeline, ensuring alignment with the District’s Qualified Allocation Plan and affordability goals.
Director’s Special Initiative Projects	Applications for special initiatives must be submitted to DHCD outside the standard Consolidated RFP process, following the guidelines in the most recent Qualified Allocation Plan.	Eligibility will be determined by DHCD based on alignment with project-specific initiatives and compliance with affordability standards outlined in federal and DC LIHTC guidelines.

Impact of LIHTC in DC Cities and Communities

The DC LIHTC program has transformed several neighborhoods. It addressed the affordability problem and helped enhance community infrastructure. Among such areas are:

Ward 7 and 8: In these wards, investments in low-income apartments in DC have helped address a historically high housing burden.

Anacostia: Targeted developments are being undertaken to preserve affordability and encourage equitable growth in this rapidly transforming area.

Columbia Heights and Petworth: Rehabilitation projects have rejuvenated old properties, providing families and individuals with affordable apartments in Washington, DC

Downtown and Capitol Hill: Mixed-income housing projects in Washington, DC, eliminate displacement by ensuring long-term access to affordability.

These investments ensure the availability of income-based apartments in Washington, DC, particularly in areas with few affordable choices.

How to Apply for the LIHTC Program in DC

The interested developers of the DC LIHTC program must undergo a lengthy LIHTC application process aligned with federal LIHTC requirements.

Prepare Application Materials

Form 202 should be complete with the DC LIHTC tab.

Letters of Intent (LOIs) from equity investors that prove the project’s financial feasibility.

Submit Application

9% LIHTC Projects: Apply through DHCD’s Consolidated RFP process or independently under the District’s Qualified Allocation Plan (QAP).

4% LIHTC Projects: Apply through DCHFA during the federal LIHTC Stage 1 application.

Review and Selection

Applications are competitively reviewed, and priority is given to projects that maximize affordability and serve high-need communities.

This process ensures that the program supports the development of income-restricted apartments in DC that align with local housing goals.

Monitoring and Compliance for LIHTC Program in DC

To ensure that affordable housing in Washington, DC, serves its purpose, monitoring and compliance measures are put in the DC LIHTC program through the following:

Affordability Check: Developers must have annual reports on the income the tenants receive and pay the rent.
Extended Use Compliance: 30 years of extended affordability are ensured for low-cost apartments in Washington, DC
On-site Evaluation: Regular inspections ensure that the property complies with the federal or local housing standards.
Financial Management: The tax credits should be proven to have been utilized to ensure the project’s financial viability.
Recapture Penalties: Failure to comply with the set requirements leads to recapture of credits or levied fines to protect the program’s integrity.
Federal Monitoring Collaboration: DHCD cooperates with federal agencies to ease compliance requirements.

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How the LIHTC Program Benefits DC

The DC LIHTC program has transformed the housing scene throughout the state, thus contributing significantly to economic and social impacts:

Affordable Housing Development: Over 20,000 affordable units have been built or saved to satisfy critical city housing needs.

Employment Generation: Supported 33,800 jobs annually by enhancing the growth of local economies.

Economic Contributions: Generated $3.8 billion in wages and business revenue, contributing to the greater good.

Community Stabilization: Fosters stable and affordable communities in potential hotspots of gentrification.

Increasing Affordable Home Equity: Affordable apartments in the DC metro are guaranteed to be available to all segments of an income group.

Taxation Benefits: The program has provided $1.3 billion in local tax revenue, strengthening public services.

A Milestone toward Affordable Housing in DC

The DC LIHTC program is an essential initiative that guarantees that affordable housing in Washington, DC, will remain accessible to low- and moderate-income residents. From creating low-income apartments to preserving existing units, this program supports equitable growth and strengthens communities.