EP#104 Michael Novogradac | LIHTC Is Under Fire. Is It Still Needed?

Jay Parsons (0:03)

Welcome, welcome. It's episode number 104 of The Rent Roll, your podcast on all things, rental housing, apartments, build to rent and single family rentals. And today, I want to wish a very happy 40th birthday to the low income housing tax credit, Lihtc. 40 years, and Lihtc has financed around four million apartment units over those last 40 years.

Far more than any other program in the country. No program has led to as much affordable housing development as the low income housing tax credit. And yet, you know, not everybody is celebrating, not everyone's feeling like it's a celebratory mood these days. If you've not noticed, the low income housing tax credit is taken fire from all sides these days. You know, I see libertarians, they call it a needless giveaway to developers. And obviously not all libertarians, that's the one line of thought we get. They'll say that market rate rents are already serving moderately lower income renters today. So why do we need Lihtc? And then we have some progressives who say that affordable housing is not actually affordable. And that affordable rents from Lihtc are comparable to market rate rents. So we should be addressing households below 30% of the area median income, not 50 to 60% of the area median income AMI. So, big questions. Is Lihtc even needed?

What do we make of all this criticism? How do we respond to it? Are there still opportunities for investment and development and lending that are not only beneficial for business, but also beneficial for society? And so today we're going to respond to some of those questions. Then better yet, you're not just going to hear from me, you'll hear from the guru of the low-income housing tax credit, who's going to dive into the realities of this program, some of the fact versus fiction. There's probably nobody on the planet who understands Lihtc better than Michael Novogradac, the founder of Novogradac and Company. And he has been involved with affordable housing tax policy and accounting from the very early stages of Lihtc's inception 40 years ago. And he has remained a major voice on the Hill as the program has evolved over the years. I'll tell you, when federal lawmakers and state as well, when they want to understand affordable housing and affordable housing tax policy, you know who they call? Mike Novogradac. And so that's who I'm calling today on this program as well. So and in addition to our conversation with Mike, you know, as always, this is a podcast of segments. And so we do lots of things every episode. And we'll address the latest headlines touching on apartments and SFR. I've got a new segment I call Hot Take. I'm going to share my hot take on class B slash C apartments and why. There's really no such thing as B slash C and much more in today's episode. And one more housekeeping item. I want to give one more plug to our new offshoot podcast, The Guest Card. If you've not seen it yet, the guest card is now out. It's live. You could find it on YouTube, Spotify, Apple and anywhere else. You get your podcast. It's 10 minutes, fast paced conversations, a lightning round conversation. Each episode is just a 10 minute conversation and heavily focused on rental housing operations with a guest each week. So check that out if you've not already. All right. So let's dive in and I want to give a big shout out, as always, to our headline sponsor, JPI, a leading apartment developer, the state of purpose to transform building, enhance communities and improve lives. Check them out at jpi.com. The JPI is the cutting edge of some major innovations in apartment development and construction.

And as always, we kick it off with a section we call, Here's a Chart. In today's Here's a Chart section, we're going to be talking about the criticisms of the low-income housing tax credit and also the histories to celebrate 40th birthday. So we'll celebrate that history and we'll talk about some of the way that's taken fire to set the stage for our conversation later with Mike. Here's a chart is sponsored by my friends at ButterflyMX, installed in over 20,000 buildings with over 100,000 five-star reviews. They help you boost revenue, reduce costs and increase resident satisfaction by making property access simple. See how at butterflymx.com.

Happy birthday, Lihtc. It's the 40th anniversary of the low-income housing tax credit, which was signed into law back in October of 1986, 40 years. And if you don't already know this, Lihtc is the primary method that we build affordable housing here in the United States. Years ago, the National Association of Home Builders called it the most successful affordable rental housing production program in our history.