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04Apr

Will tax reform upend market for low-income housing?

By: Adam Allington

Published: March 29, 2017

The election of President Trump has added uncertainty to the already speculative market that is low-income housing development.

Over the past 30 years, the Low-Income Housing Tax Credit program has created millions of units of affordable housing across the country, though still not enough to meet demand.

Trump has yet to make good on his campaign pledge to cut corporate tax rates, but even the prospect of corporate tax cuts is affecting the market for low-income credits.

“They’ll be 96 units here, all of them financed with the low-income housing tax credit program,” said Bill Whitman, a partner with Somerset Development, which owns Portner Flats, a new-construction apartment building in Washington, D.C.

In a city where the cost of rent is rising exponentially, this project will be reserved for families making below AIM or the “area median income.” Compare that with another construction site across the street.

“The average rents in that building are expected to be $5.38 a square foot,” Whitman said. “Whereas the rents for the affordable units in this project will be $1.75 a square foot.”

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