The Housing Tax Credit Program (LIHTC) was created through the Tax Reform Act of 1986 to incentivize the private market to invest in, and develop affordable housing. While ultimately regulated by
the IRS, the development program is administered by the individual states, allowing each state to prioritize their housing needs.
These federal credits are allocated to states annually. The state’s “request for proposal” process is outlined in the Qualified Allocation Plan.
In Texas, the Texas Department of Housing and Community Affairs (TDHCA) administers the program.
This RFP process is competitive, and credits are awarded based on the location, product quality, financial feasibility, and resident services offered.
Because demand for credits exceeds supply by 5 to 1 annually and the cost for an application often exceeds $100,000, we are very careful to only submit applications that meet or exceed all requirements and have a high probability of being awarded.
The Housing Tax Credit Program uses private capital to fund the development of market rate quality affordable rental housing.
The development generates federal income tax credits based on a percentage of the development cost.
Credits are sold to corporate investors who use them to offset federal tax liability. While the equity investment is made upfront, the credits are earned over a 10-year term.
Because of the significant equity investment and the risk the investor takes while credits are earned, these properties undergo a quarterly review by the investor’s asset management, ensuring the properties are well maintained and adequately funded.
Equity generated from the sale of credits allows the development of a Class A quality asset that can be leased at below market rents.
The Housing Tax Credit Program is not a rental subsidy program.
In a LIHTC community, residents pay their own rent and are subject to the same income and credit verification as well as background screening as residents of market rate properties.
The LIHTC is only a Federal Income Credit. Developments typically pay the same state and local property taxes that market rate properties do, unless they are specifically granted abatement by the local taxing jurisdiction.
Properties are professionally and privately managed and not typically affiliated with or managed by the local
Fish Pond Development personally guarantees development completion and ongoing operations of the development with oversight by the asset management departments of the institutional credit investors.
HOUSING LAB is a full service housing development consulting firm, established
in 2011. The firm specializes in the securing of funds for the development
of affordable housing via programs such as Low Income Housing Tax Credits (9% and 4%), HOME, Federal Home Loan Bank, and other public funds.
HOUSING LAB was born out of the belief that clients should have highly
proscribed services to fit their unique needs. Our approach is to carefully
customize our services to ensure the success of each client and their real
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