Nebraska Low-Income Housing Tax Credit (LIHTC) Program

The Nebraska Low-Income Housing Tax Credit Program is a significant tool in promoting affordable rental housing development across the state of Nebraska. In this NIFA-managed program, developers are incentivized to create or rehabilitate housing for low-income residents by providing both federal and state tax credits. These credits bridge funding gaps, making affordable housing solutions easier across Nebraska, including cities such as Omaha, Lincoln, Grand Island, Kearney, and North Platte. Below is a detailed resource outlining the mechanisms of the Nebraska LIHTC program, its eligibility, and its impact. 

 

How the Nebraska LIHTC Program Works 

The Nebraska LIHTC program operates on a concept similar to other programs that exist in different parts of the U.S.; it will provide the developers with tax credits that will, in turn, reduce their federal income tax liability over ten years. Such a credit allows affordable housing to break into financial viability, especially projects supporting families who have low incomes.

  

The developers can apply for 9% or 4% credits: 

• 9% LIHTC: A very competitive credit, this credit is typically awarded for either new construction or substantial rehabilitation projects. It covers about 70% of qualified development costs on a project. This is an essential credit for affordable housing in places such as Omaha and Lincoln, where high demand requires significant financial resources. 

• 4% LIHTC: This credit is relatively more accessible and accounts for approximately 30% of eligible costs. It usually uses tax-exempt bonds and is best used in bigger projects that take advantage of other funding sources. Grand Island and Kearney, among other cities, benefit from 4% credits for building affordable apartments. 

 

The number of tax credits a project will receive depends on the qualified development costs and the number of low-income units under federal income and rent restrictions. Developers must certify that projects fulfill these requirements for at least 15 years, and an extended use period of 15 years is often applied.  

 

Nebraska Affordable Housing Tax Credit (AHTC) 

The Nebraska Affordable Housing Tax Credit (AHTC) complements the federal LIHTC by providing a state-level tax credit matching the federal credit dollar. Enacted in 2017, the AHTC increases the fiscal feasibility of affordable housing projects, even in metropolitan cities like Lincoln and Omaha, where housing affordability will be a growing cause for concern. 

 

Like the federal LIHTC, the AHTC can be claimed over 10 years, making projects more attractive to private investors. Generally, it tries to solve the pressing housing shortages in Nebraska in both rural and urban areas, but there is an added incentive toward certain cities to make projects feasible. For example, some cities that have enjoyed the AHTC are North Platte and Kearney, thus promoting much-needed low-income housing options.  

 

Nebraska LIHTC Eligibility and Income Limits 

Eligibility for the Nebraska LIHTC program is anchored on a package of qualifications available at both the federal and state levels with the following as underlined stipulations:

 

• Income Limits: LIHTC projects must target households with incomes not exceeding 60% of the Area Median Income (AMI). Developers can also opt for threshold levels of 40% or 50% AMI to enhance their chances of winning tax credits during the competitive allocation rounds. The City of Lincoln and Omaha has its own formula for calculating AMI, which the developers will use to determine eligibility under the LIHTC. 

• Rent Requirements: The rent in LIHTC units should not surpass 30 percent of the tenant’s income. This can make housing affordable and remain affordable, especially in areas like Omaha that have witnessed a huge increase in the cost of housing. Thus, affordability becomes a factor. 

• Minimum Set-Aside Requirement: Of the LIHTC-funded project units, at least 20 percent shall be set aside for occupancy by families whose incomes are 50 percent or less of the AMI, and at least 40 percent shall be set aside for occupancy by families whose incomes are 60 percent or less of the AMI. This ensures that a major part of the development will be available to low-income families.  

 

But that’s just not all. Developers must also meet other Qualified Allocation Plan requirements NIFA sets out, focusing on projects that address the local need for housing, are more affordable, or serve the elderly and disabled.   

 

Compliance and Monitoring for Nebraska LIHTC Projects 

The developers must abide by strict LIHTC compliance rules once tax credits are awarded. The compliance period runs at least 15 years for both LIHTC and AHTC projects; upon culmination, most projects trigger an extended use period of the same duration.  

 

Key compliance measures:

  

• Annual Income Certifications: The resident’s income is confirmed at move-in and recertified annually after that. This will ensure that units stay occupied by low-income families, as stipulated by mission goals. 

• Rent Controls Monitoring: Rent levels must fall within the federal and state rent established by the tenant’s income and Local AMI. Rental caps exist in cities such as Omaha and Lincoln. Developers should monitor them yearly to ensure they stay within the required limits. 

• Physical Inspections: NIFA conducts periodic inspections to ascertain that the LIHTC properties remain up to or above the quality requirements and that units remain in good condition. Liabilities for failing to meet these requirements by developers include possible recapture of credits, meaning a developer may have to return some or all the credits taken. 

 

Failure to comply with the regulations will result in severe financial loss; hence, developers must be cautious and consider NIFA’s guidelines for compliance to avoid recapturing liability and ensure the long-term viability of the projects. 

 

Nebraska LIHTC Program Impact on Local Areas 

The Nebraska LIHTC has played a significant role in achieving affordable housing solutions throughout the state. Major cities and rural areas have faced some of the following impacts: 

 

• Omaha, Nebraska: The LIHTC allocation in Omaha, Nebraska, is one of the biggest allotments in the United States. It initiated several projects meant to end the growing housing affordability crisis. The Omaha LIHTC housing program is a significant step forward toward stabilizing the market situation in various neighborhoods by offering affordable rental units to low-income families. 

• Lincoln, Nebraska: LIHTC and AHTC programs have also made Lincoln, Nebraska, see the growth in affordable housing projects. These credits have been used for affordable apartments in new and existing constructions, and low-income housing in Lincoln, Nebraska, remains a priority in the city’s housing strategy.   

• Grand Island, Nebraska: The LIHTC program has provided affordable apartment complexes for working families and seniors living in smaller cities, such as Grand Island. Such development preserved the stock of affordable housing in rural Nebraska.  

• LIHTC Housing in Kearney, Nebraska: Another example is the LIHTCs, which provide good-quality and affordable rentals supported by LIHTC financing, which has helped to reduce the housing shortage in this fast-growing community. 

• North Platte, Nebraska: Low-income Housing Tax Credits have been critical in North Platte to bridge the housing gap among very low-income individuals and families. LIHTC has demonstrated itself as very significant in producing quality affordable rentals, which will further improve the total housing stock in the area. 

 

Conclusion 

The Nebraska LIHTC Program is recognized as the tool for coordinating with the Nebraska AHTC Program in addressing affordable housing challenges in the state. 

 

The program allows both urban and rural areas to access the federal and state tax credits available in Nebraska. Thus, both urban and rural housing projects stand to become profitable propositions for low-income families. 

 

Cities such as Omaha, Lincoln, Grand Island, Kearney, and North Platte have been some of the recipient cities with LIHTC and AHTC, thus increasing the provision of affordable and inclusive communities.