Possibly the only good thing about the One Big Beautiful Bill

The One Big Beautiful [sic] Bill Act (see Josh’s Heart and Home column for more about the OBBBA) has one silver lining: a long anticipated expansion of the Low Income Housing Tax Credit (LIHTC).

For at least the past decade, there has been bipartisan support for a package of policy reforms to expand LIHTCs.  The OBBBA codified a couple of these: (1) it makes permanent the 12% increase to the allocation of 9% tax credits and (2) for the 4% tax credit,  it lowers the requirement for private activity bond financing from 50% of a project’s budget to 25%.  In California, where the affordable housing tax-exempt bond is over-subscribed, lowering of the 50% bond financing requirement will free up more of the state’s bond cap to support substantially more affordable housing development.  However, without a commensurate increase in local funding, much of the newly created housing will not reach people with lower incomes who need deeper affordability.