On September 5, the Department of Housing and Community Development (DHCD) issued proposed guidance on the new income averaging set-aside option for the Low Income Housing Tax Credit (LIHTC) program. To download the proposed guidance, click here.
In March, the President signed federal spending legislation that included a change to the federal LIHTC that established a new minimum set-aside election for new LIHTC developments.
A project may now qualify for tax credits if 40% or more of the units are both rent-restricted and occupied by households with incomes that do not exceed an average imputed income limitation equal to or less than 60% of area median income (AMI), based on designated imputed income limitations.
Prior to the changes, projects could only qualify for tax credits if:
- At least 20% of the units were both rent-restricted and occupied by households with incomes at or below 50% of AMI; or
- At least 40% of the units were both rent-restricted and occupied by households with incomes at or below 60% of AMI.
DHCD plans to hold several information sessions on the income averaging guidance over the next month.