Biden’s FY 2023 Budget Request Includes $71.9 Billion in HUD Funding, $331 Million for CDFI Fund, Permanence for NMTC, Selective Basis Boost for 4% LIHTC Properties
President Joe Biden today released his proposed fiscal year 2023 (FY 2023) budget, which includes provisions to make the new markets tax credit (NMTC) permanent and to allow selective basis boosts for bond-financed affordable housing properties, which pair with 4% low-income housing tax credits (LIHTCs). The budget also includes $71.9 billion for the U.S. Department of Housing and Urban Development (HUD)–$6.2 billion more than the 2022 level–and $331 million for the Community Development Financial Institutions (CDFI) Fund, an increase of $25 million over the FY 2022 level.
he Department of the Treasury released a FY 2023 Green Book on the $7.9 billion LIHTC proposal, which would allow allocating agencies to give nongeographic basis boosts to bond-financed affordable housing if the boost were required to make the property financially feasible–but only to new construction or substantial rehabilitation that adds new net units, similar to the state discretionary basis boost proposal in the Affordable Housing Credit Improvement Act (H.R. 2573/S 1136). The NMTC, currently extended through 2025 at $5 billion per year in allocation, would become permanent with annual inflation adjustments after 2026.
Background
The Housing Credit (HC) program provides for-profit and nonprofit organizations with a dollar-for-dollar reduction in federal tax liability in exchange for the acquisition and substantial rehabilitation, or new construction of low and very low income rental housing units. Eligible development types and corresponding credit rates include: new construction, nine percent (9%); substantial rehabilitation, nine percent (9%); acquisition, four percent (4%); and federally subsidized, four percent (4%). A Housing Credit allocation to a development can be used for 10 consecutive years once the development is placed in service.