Danielle Katz, counsel, was featured in the Bisnow article “LIHTC Changes Bring Hope for Affordability Advocates, but HUD Cuts Loom,” about how recent federal changes could significantly expand the Low Income Housing Tax Credit (LIHTC) program, a major driver of affordable housing development.
The One Big Beautiful Bill Act, signed in July, permanently funded LIHTC, lowered the bond financing threshold from 50 percent to 25 percent, and boosted the 9 percent allocation by 12 percent starting in 2026—potentially enabling 1.2 million additional affordable units over the next decade. Concerns over private investor capacity were eased by the Federal Housing Finance Agency’s move to double Fannie Mae and Freddie Mac’s LIHTC investment caps to $4 billion, with targeted allocations for difficult-to-serve and rural markets.
Industry leaders said these policy shifts could bring unprecedented equity into the affordable housing market, but the ultimate impact depends on the fate of US Department of Housing and Urban Development (HUD) funding. HUD-administered rental assistance programs often provide critical financing layers for LIHTC projects, and current federal budget proposals include potential cuts or flat funding, which could function as reductions due to rising costs.
Uncertainty around HUD funding has already led some developers and lenders to scale back voucher-dependent projects, though others remain committed by adjusting fundraising or developer fees. “Maybe it’s more aggressive fundraising on their part, or maybe it’s a cut slightly to their developer fee, but they’re very much still looking to make these projects happen,” Danielle said.
Stakeholders stressed that LIHTC and HUD programs are deeply interconnected, and bipartisan support for long-standing HUD initiatives may help protect them from severe cuts. Final appropriations decisions are pending as the October 1 budget deadline approaches.
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