AHF LIVE: Trump’s Impact on Project-based Section 8 (HAP) and Low Income Housing Tax Credit (LIHTC) Sales

With the 2016 Presidential Election in the rearview mirror, it is time to look forward to how the Trump Administration will affect the Section 8 (HAP) and Low Income Housing Tax Credit (LIHTC) programs.  This was the primary focus of the AFH Live 2016 conference in Chicago with many industry leaders sharing their insights and perspectives on the topic.

We know with certainty that Donald J. Trump will be our next President.  There is uncertainty to his agenda and views on affordable housing.  Through-out President-Elect Trump’s campaign, he was relatively quiet on his positions on affordable housing policies and programs.  President-Elect Trump’s selection for the HUD Secretary position will have a significant factor on the future of affordable housing programs.  Fortunately for the affordable housing industry, the Low Income Housing Tax Credit (LIHTC) program still maintains by-partisan support from elected leaders in both houses of Congress.  There was little concern from conference speakers that the LIHTC program would be cut completely, but there were varying opinions on the amount of funding the program will receive.  Given President-Elect Trumps long career in real estate, some maintained optimism he will recognize the positive impact that the LIHTC program has had on the affordable housing industry.

The conference topics also included tax reform discussion that could be fast tracked in the near future using the congressional reconciliation process since Republicans control both houses of congress.  Changes in corporate tax structures could affect the LIHTC program’s ability to raise equity for future development and rehabilitation projects.  Other headwinds for the industry included, increasing interest rates, increasing construction costs and shortage of skilled labor.  Others maintained cautious optimism that President-Elect Trump’s pro-business/pro-growth agenda may aid in rising median incomes that could result in increases in LIHTC maximum rents and rental revenue.  The affordable housing industry is not a single variable program, so many factors need to be considered.

The general sentiment from industry leaders and speakers was that 2017 will likely continue with ‘business as usual’ for the structure of LIHTC deals, while pricing and demand may temporarily plateau or soften slightly until there is more certainty.  The structure of deals could look different in 2018.   More detail on this topic can be found at Affordable Housing Finance.

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