Our friends at the Affordable Housing Tax Credit Coalition (AHTCC) are encouraging affordable housing stakeholders to weigh in on a significant federal proposal that could have long-term implications for Housing Credit investment and affordable housing production. Comments are due by October 13 on a proposed rule from the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) that would amend regulations implementing the Community Reinvestment Act (CRA).

According to the AHTCC, the proposal would remove the CRA investment test requirement for banks with assets between $1.649 billion and $10 billion. The coalition argues that this change could reduce incentives for a significant number of banks to invest in Low-Income Housing Tax Credits (LIHTC), one of the primary financing tools used to develop affordable housing across the country.

The stakes are substantial. AHTCC notes that banks provide roughly 75% to 80% of Housing Credit equity, with at least 71% of that investment motivated by CRA considerations. The organization’s survey found that banks under the $10 billion asset threshold invested approximately $1.6 billion in Housing Credit equity over a five-year period, with rural communities particularly dependent on these investments.

For California’s affordable housing industry, this proposal is worth watching closely. Reduced demand for Housing Credit investments could have consequences for project pricing, equity availability, and housing production at a time when the need for affordable housing remains acute. CCAH encourages members interested in the issue to review the materials prepared by the AHTCC and consider submitting comments before the October 13 deadline. We appreciate the leadership of the Affordable Housing Tax Credit Coalition in analyzing the proposal and providing resources for the affordable housing community.

You can read the full AHTCC article here. And as always, we’ll continue monitoring federal policy developments that could affect affordable housing financing and production in California.