What is LIHTC?

How does the Low Income

Housing Tax Credit Program (LIHTC) Work?

The Low Income Housing Tax Credit (LIHTC) is a tax credit that, in some ways, just happens to create housing. Created in 1986, the tax credit opened up an avenue for public-private partnership in the development of affordable housing. The development and financing of LIHTC is a technical and labor-intensive enterprise. For more detail, see the infographic below.

Unlike other federally-funded housing programs, LIHTC is not administered by the U.S. Department of Housing and Urban Development (HUD) or the U.S. Department of Agriculture (USDA). Instead, LIHTC is administered by the U.S. Department of the Treasury at the federal level.

At the state level, each state has an agency that is responsible for administering LIHTC in that state. This state agency is responsible for following the federal rules related to the LIHTC program, setting state housing policy, selecting projects for funding, and monitoring LIHTC developments.

 
Infographic of the process by which low income housing tax credits are allocated

What are Qualified Allocation Plans (QAPs) and Compliance Manuals (CMs)?

Qualified Allocation Plans (QAPs) and Compliance Manuals (CMs) are the primary documents that indicate a state's LIHTC housing policy and practice.

Roughly, QAPs function as a sort of request for proposals for housing developers. State agencies that administer the LIHTC program can use QAPs to encourage certain kinds of developments -- including more housing for survivors! The QAP also includes key requirements for developers and owners participating in the LIHTC program. 

While the QAP is most important at the time a developer is applying for funding through LIHTC, the CM is most important after the property has been built. The CM details a wide range of day-to-day operational processes and policies that must be followed by owners and property managers.

Information about VAWA compliance -- the VAWA housing rights as well as best practices -- can be in either the QAP or CM, depending on the state.

QAPs are generally updated annually and have a time period for public comment. The public comment period for QAPs is an excellent time to advocate for VAWA compliance and best practices.