Nevada Low-Income Housing Tax Credit (LIHTC) Program

The Nevada LIHTC Program is a policy initiative designed to address Nevada’s developing affordable housing crisis. Funded by the federal government and administered through NHD, the program delivers tax credits to developers to build or rehabilitate rental homes for low-income families. Nevada’s LIHTC program has played a critical role in the state’s communities of Las Vegas and Reno as well as the smaller cities of Henderson, Carson City, Sparks, and North Las Vegas-to assist them with housing needs.

 

Here, we have a structured resource to help you understand the LIHTC Program in Nevada, Nevada LIHTC income limits, how to apply for LIHTC in Nevada, and much more.  

How Nevada LIHTC Works 

In essence, the federal LIHTC system, created by the Tax Reform Act of 1986, is the basis for Nevada’s LIHTC program. The program ensures that some tax credits are reserved for developers who have agreed to develop or redevelop housing for low-income households in exchange for dollar-for-dollar reductions in federal tax liabilities. Such tax credits are issued based on a Qualified Allocation Plan, commonly known as QAP, in Nevada, outlining how competition is held to allocate competitive credits.

 

There are two types of LIHTC credits:  

 

• 9% Credits: These credits pay for up to 70 percent of a project’s eligible development costs, and winners are selected with an extremely competitive process. This particular type of credit is often applied to new construction projects or those projects with strong rehabilitation efforts. Las Vegas is extremely in need of them to make affordable housing available.  

• 4% Credits: These credits apply to around 30% of eligible development costs. They are less competitive but often combine with tax-exempt bonds. They are typically used for more extensive projects or in areas where the development cost is relatively lower, such as Henderson and Sparks. 

 

The tax credits are spread over 10 years, and developers must preserve the affordability of the developments for at least 15 years. Furthermore, many projects voluntarily agree to longer-period affordability covenants, up to 30 years, to achieve better QAP scores. 

Affordable Housing in Las Vegas and Reno via LIHTC 

Las Vegas housing has become really unaffordable to low-income to modest-income families. The Las Vegas LIHTC housing program has provided just the due complacency. Thousands of LIHTC-supported developments have been created for apartment housing for families, older people, and people with disabilities earning less than 60% of AMI.

  

Furthermore, Reno, Nevada’s affordable housing tax credit program is instrumental to the present city’s demand for housing. Population growth at breakneck speed has occasioned skyrocketing rentals, and the majority of the poor residents are being kicked out of their houses. The populations in Reno, Nevada, supported by the LIHTC, have come in to cushion the pressure in the forceful eviction of low-income groups from houses. The program also affects projects in Sparks and Carson City by providing reasonably priced long-term housing for residents of that program. 

Nevada LIHTC Income Limits and Tenant Eligibility 

Nevada rental housing tax credit units must set aside 40% of the units for families whose income does not exceed 60% of the Area Median Income, though many developers are targeting even lower levels of income to improve their creditworthiness. For example, developers may set aside units for tenants who earn as little as 30 or 40 percent of the AMI, especially in high-demand areas like Las Vegas and North Las Vegas, where demand is more pertinent.

 

Income limits are based on household size and location of the project. For instance, income limits in Reno would probably be not the same as those in Henderson or Las Vegas because the AMI differs from one region to another. These thresholds keep changing annually, and developers need to ensure at lease inception and at each anniversary of the initial lease that the tenant income is within the thresholds published and complied with for the whole 15 years of compliance.

Application Process for Nevada LIHTCs 

To submit an application for LIHTC in Nevada, one must undergo all the procedures outlined and provided by the Nevada Housing Division. These range from, first and foremost, the Qualified Allocation Plan by the state of Nevada. Based on the state’s QAP, the Nevada Housing Division expects to receive projects from the developers that it will evaluate within the standards of the state’s QAP. In this regard, priority allocations go to developments of the lowest-income population, projects within a Qualified Census Tract (QCT), and developments near employment centers.

 

• Application Submission: Applicants are required to submit applications in full, which include project details, financial plans, and proof of control over the site. A further applicant will be required to submit a market study, environmental reports, and evidence of community support. 

• Review Process NHD reviews applications based on several factors, including the financial feasibility of projects, their location, and the number of low-income units offered. Generally, those offered in high-demand areas such as Las Vegas and Reno experience stiff competition due to the limited allocation of 9% credits.  

• Tax Credit Allocations: If approved, they will have a share of LIHTCs that may be sold to investors, producing equity capital. Such equity will reduce the requirement for debt and allow developers to lease the buildings at relative lower rates. 

Nevada LIHTC Project Compliance and Monitoring  

Compliance is a core requirement in the Nevada LIHTC program. The Nevada Housing Division ensures that federal and state requirements are being followed through ongoing monitoring of each LIHTC-funded development. The compliance period shall be at least 15 years; extended-use periods of an additional 15 years are often chosen.

 

Key elements related to compliance: 

 

• Annual Income Certifications: Developers shall check tenants’ incomes annually to confirm continued eligibility. 

• Rent Limits: LIHTC limits and adjusts rents for its units based on tenant income and associated changes in the AMI. For instance, rent limits in Las Vegas vary from Sparks because of a variance in local housing costs. 

• Physical Inspections: Regularly inspect the properties to ensure they meet various health and safety standards and that the units remain in good condition.  

 

Failure to adhere to such LIHTC compliance requirements may lead to several penalties, among them the recapture of tax credits, forcing the developer to pay back part or all the credits obtained. 

Statewide Impact of Nevada’s LIHTC Program  

Since its inception, the Nevada LIHTC program has greatly contributed to alleviating the affordable housing shortage within the State of Nevada. Thousands of incorporated LIHTC affordable rental units within Las Vegas city limits provide much-needed shelter within the rapidly expanding city. The same pattern is now being seen in Henderson, with affordable housing development increasing and many different projects targeted at low-income households and older people being supported by LIHTC funding.

 

The program has mitigated rapid population growth in Reno by stabilizing rent and excluding low-income displacement. Sparks and Carson City have shared these benefits with developers who have used LIHTC to construct or rehabilitate affordable apartments for local citizens. 

 

Despite these successes, affordable housing continues to be in demand. According to the Nevada Housing Division 2017 report, there is still a shortage of more than 200,000 affordable units, and the largest deficits are in Las Vegas and Clark County. LIHTC, combined with other state and federal initiatives, can continue to play an important role in meeting the growing needs.  

Other Housing Programs Nevada for Low-Income Families 

In addition to LIHTC, there are other programs for housing low-income families in Nevada:

 

• Nevada State Tax Credit (STC): This fills the gap for developers to complete financing for affordable housing projects. Often, the STC is combined with LIHTC to make it more attractive. 

• Provide funding for the Affordable Housing Trust Fund (AAHTF): AAHTF is a state-funded program that provides gap financing and other forms of support for developers of affordable housing, such as down-payment assistance for first-time homebuyers. 

• HOME Investment Partnerships Program: Federally assisted, used for the development and rehabilitation of affordable housing as well as subsidies for low-income renters.  

 

These programs, along with LIHTC, ensure that the state of Nevada continues expanding its affordable housing stock and that most helpless persons within its borders are accommodated. 

Conclusion 

The Low-Income Housing Tax Credit (LIHTC) Program is a stalwart in the state’s battle against housing insecurity in Nevada. A cooperative among both federal and state tax credits enables the programmers to promote private development companies to acquire resources for building low-cost houses for low-income families, the elderly, and even those with disabilities.

 

Given the increasing demand for affordable housing, Las Vegas, Reno, Henderson, and Sparks are prime locations, so the LIHTC program will be an important tool for addressing housing needs in Nevada.