The Consolidated Appropriations Act, 2021 (the CCA) became law this past Sunday. The CCA has several features of interest to the low-income housing community.

4% Deal Floor: The 4% low-income housing tax credit is worthy of its title. Before the CCA, the actual 4% credit value depended on an average of annual applicable Federal mid-term and long-term rates. Lately, those rates have been very low, resulting in a 3.06% to 3.09% credit. That lower credit rate means that low-income housing projects have been realizing much less capital from the 4% tax credit. Combined with reduced financing from other traditional low-income housing financing sources, the lower credit amount has, according to several estimates, dramatically reduced the number of low-income housing units constructed in recent years. The CCA establishes that the annual 4% low-income tax credit will be worth at least 4% of the qualified basis of the project. That means that low-income housing development will be less vulnerable to periods of low applicable Federal rates.

$25 Billion in Emergency Rental Assistance: Each state will be allocated a share of the $25 billion pool to provide assistance to low- and moderate-income families. According to an estimate published by the National Low-Income Housing Coalition and Novogradac, an accounting firm, Massachusetts will receive approximately $460 million of that pool. This money, together with other unemployment benefits, stimulus checks, and an extended eviction moratorium, will help many low-income families, and also provide revenue to operate low-income housing projects.

Increased LIHTC Allocation for Disaster Areas: The CCA also authorizes housing agencies to allocate more 9% credits to projects in designated disaster areas. The $1.2 billion increase will help areas – like California – whose housing stock has been damaged or destroyed by wildfires and other disasters.