LAYERS OF THE LOW-INCOME HOUSING TAX CREDIT (LIHTC) PROGRAM The Low-Income Housing Tax Credit (LIHTC) program was created via the Tax Reform Act of 1986 and nearly three million affordable housing units were built or “placed in service” between 1987 and 2015, per the Department of Housing and Urban Development (HUD). HUD budgets approximately $8 billion in tax credits annually to state agencies, such as the Georgia Department of Community Affairs (GA DCA) and North Carolina Housing Finance Agency (NCHFA). These agencies allocate tax credits to developers via an application process for the construction or acquisition-and-rehabilitation of low-income housing. Developers receive the tax credits prorated over a 10-year period and sell the tax credits to investors in order to raise equity. In turn, the developers provide below market-rate housing for a 30-year period. At Year 15, owners may apply to exit the program via the qualified contract process if the property is eligible. The LIHTC program is broken into two types. The 4% tax credit subsidizes 30% of new construction and can be combined with other federal subsidies. The 9% tax credit subsidizes 70% of new construction and cannot be combined with other federal subsidies.