How it Works
Developers of affordable rental housing developments apply to EOHLC for tax credits. If they are awarded the credit, the developers (either for-profit or nonprofit) seek investors to help pay for the development of the housing. Intermediaries (known as syndicators) act as a bridge between investors and projects and often pool investors' money into equity funds. In exchange for providing development funds, the investors receive a stream of tax credits. Projects can qualify for two types of credits: a 9% credit, or a 4% credit.* Tax credits can be claimed by the investors for 10 years. For example, based on an investor willing to pay $.75/tax credit dollar, a project eligible for $500,000 in annual credits, would receive $3,750,000 ($500,000 in credit x 10 years x $.75) in equity.
* 4% tax credits are allocated by the MassHousing (formerly Massachusetts Housing Finance Agency) in conjunction with MassHousing's tax-exempt bond financing. The Massachusetts Development Finance Agency (MDFA) also allocates 4% tax credits in conjunction with tax-exempt bonds.
Who is Eligible
Both for-profit and nonprofit developers can qualify for the credit. At least 20% of the units must be reserved for persons with incomes at/or below 50% of the area median income adjusted for family size; or at least 40% of the units must be made affordable for persons with incomes at/or below 60% of the area median income adjusted for family size. In addition, the project must be retained as low-income housing for at least 30 years.
LIHTC Eligible Activities and Affordability Requirements
Tax credits can be used to support the acquisition and/or rehabilitation of existing structures for rental use, including distressed or failed properties, or the new construction of rental projects. Projects seeking tax credits must have a minimum of 8 tax credit-assisted units. The minimum term of affordability is thirty years.
All units receiving tax credit assistance must have 20% or more households earning no more than 50% of area median income or 40% or more households earning no more than 60% of the area median income. In addition, ten percent of the total units must be reserved for persons or families earning less than 30% of area median income. (Please see the additional program information below for a list of maximum rents and household incomes for your community.)
LIHTC Funding Limits
The maximum tax credit award for a new assisted living project is $500,000. The maximum for any other project is $1,000,000. However, EOHLC may elect to award more than $1 million in credit (up to a maximum of $1.3 million in credit) to large scale neighborhood impact projects. Requests for allocations greater than $1 million will be considered on a case-by-base basis if the sponsor is able to demonstrate the potential impact of the project and if EOHLC has sufficient credit to make a larger allocation. EOHLC expects that a sponsor receiving an award greater than $1 million (up to $1.3 million) will request reduced amounts of subsidy financing from the Office. The maximum eligible basis per unit in tax credit developments is $250,000 per assisted unit for projects within the Boston metro area and $200,000 per assisted unit for projects outside the Boston metro area. EOHLC will cap the allowable eligible basis in the preservation set-aside at $175,000 per assisted unit.
LIHTC Selection Criteria
- Conformance with EOHLC Funding Priorities
- Strength of overall concept
- Strength of development team
- Demonstrated need for project in the target neighborhood
- Suitable site and design
- Appropriate scope of rehabilitation or construction
- Appropriate total development cost for properties included in proposal
- Financial viability of the project
- Degree of local support, including local funding commitments
- Evidence of readiness to proceed
- Evidence of satisfactory progress on projects previously funded with EOHLC resources
- Incorporation of sustainable development
LIHTC - How to Apply
EOHLC makes Low Income Housing Tax Credit funding available through a Notice of Funding Availability (NOFA), twice yearly. Applicants must complete and submit the One Stop Housing Application.
Mini-Round 2023 NOFA (as amended)
HUD's Difficult to Develop Areas - (In addition to 'HUD's Difficult to Develop Area' list, EOHLC has also designated additional Difficult to Develop Areas in the QAP).
LIHTC News and Updates
LIHTC Carryover Forms
LIHTC - Regulatory Related Documents
LIHTC - Massachusetts State Tax Credit Documents
For additional information please call the Low Income Housing Tax Credit staff at (617) 573-1300.