Housing and Economic Recovery Act of 2008 (HERA) and the American Recovery and Reinvestment Act of 2009 (ARRA)
The Housing and Economic Recovery Act of 2008 (HERA) and the American Recovery and Reinvestment Act of 2009 (ARRA) contained several provisions intended to stabilize the LIHTC industry by creating job and promoting investment and consumer spending. Two separate programs related to LIHTC were implemented within ARRA to stimulate affordable housing development during the economic downturn:
- Tax Credit Assistance Program (TCAP) provides funding for capital investment in LIHTC properties. State housing finance agencies distribute these funds competitively and according to the respective state’s Qualified Action Plan (QAP).
- Section 1602 Exchange Program (Section 1602) allows the state housing finance agencies to elect to receive cash with respect to a certain portion of the state’s tax credit ceiling. The state housing finance agencies must use those funds to make sub-awards to developers to finance the acquisition or construction of qualified affordable housing properties, subject to the same requirements as the program.
These stimulus programs played a significant role in keeping development in the LIHTC industry from catastrophic failure during the economic downturn from 2008 to 2010. This period brought to light flaws within the LIHTC industry and proved that with a few minor adjustments and the support of the industry by regulators the LIHTC can continue to be the best avenue for Affordable Housing Development.
