Louisiana Low-Income Housing Tax Credit (LIHTC) Program

The Low-Income Housing Tax Credit Program is the foundation of Louisiana’s affordable housing program and has revolutionized the low-cost housing crisis in the state. Through this federal program, since 1986, private sector investment has been allowed to develop and preserve decent and affordable rental housing for low-income families throughout Louisiana.

 

With housing prices continuing to rise and demand for more affordable housing, the LIHTC Program is becoming an increasingly crucial tool for low-income families, the elderly, and people with disabilities to realize safe, energy-efficient, and affordable homes. 

 

Louisiana LIHTC Program Overview 

LIHTC Program grants developers federal tax credits if they allocate a portion of their housing units for low-income occupants. In Louisiana’s case, the program emphasizes that reserved units should be kept affordable for families whose earnings are below 60% of AMI. The stated program refers to both new buildings and significant restoration works.

 

Funded under Section 42 of the Internal Revenue Code (IRC), LHC administers the program at the state level. It is responsible for allocating the tax credits, monitoring the development process, and enforcing the long-term affordability and LIHTC eligibility requirements for tenants. 

 

Eligibility for Louisiana LIHTC Program  

For Developers 

• Non-profit and for-profit developers are eligible to compete for LIHTC funding, provided they meet the minimum standards established by the program, which are: 

• Provides a rental unit to households whose income falls below 60% of the AMI bracket. 

• Should pass construction or rehabilitation criteria that provide a good supply of long-term affordable housing and ensure energy efficiency. 

• Adhering to the Qualified Allocation Plan (QAP) in reviewing and ranking projects according to the location of the project area, type of project, and type of tenant, like family, senior, or supportive housing. 

For Tenants  

They must have incomes below 60% of the AMI for the area in which the housing is located. For the units to keep their status of being affordable, they have rent limits set for them, with a general rule that such rents must not exceed 30% of the income of the tenant . The LIHTC program in Louisiana has played a monumental role in the development of a wide variety of housing in family units, senior housing, and specialized housing for people with disabilities. 

 

LIHTC Application Process for Louisiana  

The application and reservation process for LIHTCs falls under the auspices of the LHC. Overall, the process developers must go through to win this grant must be very structured. They start by submitting an extensive application that covers the project’s location, the scope of the income targeting, affordability duration, and adherence to certain building standards.  

 

Some of the critical steps in the process include: 

• Application Submission: The developers will submit applications conforming with the QAP, outlining their respective proposed affordable housing projects and their applicability to eligibility criteria. QAP is revised each year to reflect current housing needs and priorities in Louisiana. 

• Scoring and Project Selection: Projects are scored upon submission based on several diverse criteria, including geographic need, energy efficiency, design features, affordability, and community impact. The scoring system ensures projects aligning with state goals are prioritized for funding. 

• Tax Credit Allocation: Based upon their respective scores, selected projects are awarded tax credits, which developers can sell to private investors for construction or rehabilitation capital. The amount of credits allocated depends on the project’s financial viability and ability to meet affordability criteria over the compliance period. 

• Finalization and Compliance Agreement: A developer must agree to a compliance contract, which can be up to 15-30 years, depending upon the nature of the project, maintaining rent restrictions, tenant income qualifications, and property standards. LHC ensures that all compliance documents are executed before construction commences or rehabilitation is completed. 

 

This structured process ensures that tax credits are reserved for projects that will have the most significant impact on providing affordable housing to low-income residents throughout Louisiana. 

 

Louisiana LIHTC Compliance and Monitoring 

The Louisiana Housing Corporation engages in intense compliance and monitoring activities to ensure that developers follow through on the program requirements for the entire affordability period.  

 

This includes: 

• Annual Reporting: A developer must file annual reports showing tenant income, rent levels, and physical condition of properties to ensure that eligible low-income tenants occupy all LIHTC units LIHTC and that rents are kept at program maximums. 

• Physical Inspections: The LHC performs periodic inspections of the LIHTC properties to ensure compliance with federal standards under the Uniform Physical Conditions Standards. This involves inspecting the individual housing units, common areas, and building systems to provide a safe and habitable environment. 

• File Audits: Besides onsite inspections, LHC conducts tenant file audits to verify correct income eligibility and compliance with program rules. These audits can be conducted onsite or electronically. 

• Noncompliance Reporting: When a property is out of compliance, LHC will report to the IRS on Form 8823, Report of Noncompliance. Property owners are given a schedule of corrective action items; failure to comply can include recapture of tax credits, which means owners will lose the financial benefit they received through the program. 

 

These compliance measures are essential to making the LIHTC-funded housing decent, safe, and accessible to low-income Louisianans for the long term.   

 

LIHTC Program Impact in Louisiana 

The LIHTC program has had exemplary impacts since its inception in the development of Louisiana’s affordable housing landscape for: 

 

• A total of 76,645 homes were developed or preserved . 

• Supported 117,329 jobs in construction and related industries . 

• Generated $13.247 billion in wages and business income . 

• Households Served: In 2017 alone, it served 165,052 low-income tenants with safe and affordable housing options . 

In this light, the LIHTC program has reached beyond low-income residents; it has benefited the state’s economy by creating jobs and other local investment opportunities. 

 

Louisiana LIHTC Program Challenges and Future Directions 

Though the Louisiana LIHTC program has increased the levels of affordable housing being produced, challenges persist.  

 

Louisiana still has a highly acute shortage of homes that are classified as being highly affordable, with 47 percent of households expending more than half of their income on rent. This has all been exacerbated by greater construction costs, funding gaps, and growing demand to create barriers against developers.  

 

To that end, the Louisiana Housing Corporation has instituted policies like eviction prevention programs and resilient building standards to stymie those challenges. However, more support is needed at both federal and state levels to continue meeting the growing demand for affordable housing in the state.  

 

Conclusion 

The Louisiana Low-Income Housing Tax Credit Program represents one solution that has proven to work in the state’s affordable housing crisis. It ensures safe, affordable homes for Louisiana’s most vulnerable citizens. 

 

With the growing demand for low-income housing, access to the LIHTC program is critical to providing an overall solution to bridge gaps in the supply of houses, economic development, and community building.