The LIHTC Program, which is based on Section 42 of the Internal Revenue Code, was enacted by Congress in 1986 to provide the private market with an incentive to invest in affordable rental housing. Federal housing tax credits are awarded to developers of qualified projects. Developers then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the developer would otherwise have to borrow. Because the debt is lower, a tax credit property can in turn offer lower, more affordable rents. Provided the property maintains compliance with the program requirements, investors receive a dollar-for-dollar credit against their Federal tax liability each year over a period of 10 years. Each year, the IRS allocates housing tax credits to designated state agencies-typically state housing finance agencies - which in turn award the credits to developers of qualified projects. Indiana allocates housing tax credits through a competitive process.
The City of Fort Wayne's HANDS Board reviews tax credit applications and recommends to the Mayor whether or not the proposal should receive support. Fort Wayne's Mayor then chooses whether to recommend support for the project to the Indiana Housing Community Development Authority.
Local projects that have received LIHTCs include:
- Renaissance Pointe
- The Courtyard of Fort Wayne
- Randall Lofts