Louisiana Legislative 2014 Session Update
HB 420 submitted by Representative Pearson was deferred by Ways and Means Committee and was not re-intorduced in the current session. Click here for a copy of the bill.
HB 420 will have a marked impact statewide on housing. This proposed bill looks only at the dollar amount of the tax credits or HOME funds initially received, but it did not consider the impact of the credit on the value of the property. These limitations make the property extremely illiquid:
LIHTC properties do not receive an annual subsidy because the credits are routinely sold to third-party investors for construction costs.
LIHTC properties carry thirty-year-long restrictive covenants as well as restrictions on raising rents.
LIHTC properties are open only to households with incomes below a set maximum threshold. The developers are restricted in the amount of rent they may charge their tenants.
When a LIHTC property is sold, the new buyer would receive no benefit from the initial tax credit.
Mississippi Supreme Court just struck down a similar law passed in the Mississippi legislature.
In short, LIHTC properties, in terms of value, are not similarly situated to an ordinary
private complex. These properties have a different financing scheme, a restricted clientele, minimal liquidity, and very few financing avenues.