The Daily Dirt: Better “look” next time, LIHTC

Do low-income housing tax credits need a rebrand? 

First of all, it is a mouthful. Second, it has an acronym that, personally, stops me in my tracks. How do you pronounce LIHTC? LIE-tick? LIE-tech? I’ve heard some experts successfully say it, but it never sounds great.

These are probably not the reasons why reform of this key affordable housing funding source has repeatedly failed to happen. But they probably do not help. I perk up when I hear someone mention low-income housing tax credit reform, but something tells me I’m not in the majority on that.

The Senate on Friday voted down a measure that would have cleared the way for a $78 billion tax package that included changes to the tax credits. Lawmakers then left Washington for August recess, all but ensuring that any major tax overhaul will have to wait until after the election, per Politico.

Changes to the tax credits have previously garnered bipartisan support, but tend to get dragged down with other policies. This time around, the House signed off on the bill, but an expansion of another tax credit, the Child Tax Credit, faced fierce opposition from Senate Republicans because they claimed it would discourage Americans from working.

Private investors buy these housing tax credits from developers to offset their taxes, and developers use the proceeds to help fund affordable housing projects. Congress limits how much of the 9 percent credit is allocated to each state, and the tax bill would have increased that allocation by 12.5 percent through 2025, restoring an identical increase that was in place between 2018 and 2021.

The “Tax Relief for American Families and Workers Act of 2024” also would have changed the so-called 50 percent rule for 4 percent credits, which dictates that at least half of a project must be financed through private activity bonds, which are also capped by the government.

The measure would have reduced that threshold to 30 percent, higher than the 25 percent that the New York Housing Conference and other groups were advocating but still a big boost for affordable housing development.

Even at the higher threshold, the NYHC calculated, the change could generate 4,400 affordable housing units in New York City in the two years that the provisions would be in effect — and tens of thousands if they lasted for a decade. Novogradac estimated that the change could lead to 200,000 more units nationwide.

New York City has been trying to figure out more ways to finance housing without LIHTC, given the limitations of the program and the extent of the city’s housing crisis. But it remains to be seen how many units those programs could create. Changes to LIHTC are by no means a silver bullet for housing shortages, but they are a significant source of funding for affordable housing developers.

Elected officials and developers in New York have long pushed for expanding the use of these credits, and this time they came tantalizingly close to seeing temporary changes cross the finish line. It is unclear if they will have better luck when the provisions of Trump’s tax law expire next year. Much will be on the table, which also means a lot can get in the way of LIHTC reforms moving forward.  

What we’re thinking about: Will Congress let the $10,000 cap on state and local tax deductions expire? If so, would it boost New York home values? Send a note to kathryn@therealdeal.com.

A thing we’ve learned: There are strict standards for true Parmigiano Reggiano dictated by the Consorzio del Formaggio Parmigiano Reggiano, a cheese consortium. The cheese must be made with specific ingredients and must be produced in one of these areas in Italy: Parma, Reggio Emilia, Modena, Mantua on the right bank of the Po river and Bologna on the left bank of the Reno river, according to the consortium’s guidelines. Parmigiano Reggiano sponsored Italian Olympian Giorga Villa, whose team won a silver medal on Tuesday. If cheese would like to sponsor this newsletter, please let me know.

Elsewhere in New York…

— Anytime I hear about the conditions of the Hudson River tunnels, and the need to keep them in working order, I wonder if officials are actually saying: “Do you want to be late to work, or die in a water-filled tunnel?” This is why one of my big fears is stalling out in the tunnel. On Wednesday, passengers on an NJ Transit train heading to Trenton from Penn Station lived my nightmare. They were stuck in the dark for three hours when their train lost power and sat in a tunnel under the Hudson River, Bloomberg reports.

— In October, a 16-foot pigeon sculpture will join the High Line, NBC New York reports. The piece, by Colombian artist Iván Argote, is dubbed “Dinosaur.” The name is a “reference to the sculpture’s scale and to the pigeon’s ancestors who millions of years ago dominated the globe, as we humans do today,” according to Argote. He thinks the sculpture could “generate an uncanny feeling of attraction, seduction, and fear among the inhabitants of New York.”

— On Tuesday, the state’s top court heard arguments in the legal challenge against New York’s mail-in voting law, the Times Union reports. Republican lawmakers argue that the state legislature violated the New York constitution when it approved the law.  

Closing Time

Residential: The priciest residential sale Friday was $10.7 million for a 4,003-square-foot condominium at 432 Park Avenue in Midtown East. Shari Scharfer Rollins and Marc Palermo of Douglas Elliman had the listing. 

Commercial: The largest commercial sale of the day was $26.3 million for a pair of apartment buildings at 148 and 111-115 West 141st Street in Central Harlem. The combined properties have roughly 37,000-square-feet and 88 residential units. 

New to the Market: The highest price for a residential property hitting the market was $55 million for a 12,000-square-foot house at 25 Riverside Drive on the Upper West Side. Loy Carlos, Kenneth J. Moore, Colin Meagley, and Perry Law of Nest Seekers International have the listing. 

Breaking Ground: The largest new building application filed was for a 88,251-square-foot warehouse and commercial vehicle storage facility at 303 Louisiana Avenue in East New York. Permits were filed by Joseph Di Giorgio of OneFourTwo Architecture. — Matthew Elo