LIHTC Working Group Responds to Community Reinvestment Act Report

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Group Led by Novogradac & Company LLP Urges GAO to Obtain Quantitative Data on the Effect of CRA, Other Factors on the Low-Income Housing Tax Credit Market

Members of the LIHTC Working Group, in a Jan. 16, 2013 letter to James R. White, director of tax issues at the U.S. Government Accountability Office (GAO), responded to the recent report, “Community Reinvestment Act: Challenges in Quantifying Its Effect on Low-Income Housing Tax Credit Investment.” The letter responds to each of the major conclusions expressed in the report, in an effort to engage the GAO in a continuing dialogue on the Community Reinvestment Act’s (CRA’s) effect on bank investor’s demand for low-income housing tax credits (LIHTCs) as well as other, related efforts by the GAO.

The CRA is often cited as a primary factor in determining where and how banks provide community development financing. One of the CRA’s signature achievements has been to create successful partnerships among banks, all levels of government, and developers and these partnerships help leverage limited public funds. The topics covered in the report, and the LIHTC Working Group’s letter of response, include concerns about geographic imbalance in the LIHTC market, the role of the CRA in motivating tax credit investors and the effect of the CRA on LIHTC prices.

“We are excited about the positive impact that the LIHTC program is having on the nation’s low-income communities and low-income persons and its potential for future success,” said Stacey Stewart, a partner in Novogradac & Company LLP’s Dover, Ohio office who leads the LIHTC Working Group’s efforts. She noted that the goal of the GAO’s report was to quantify CRA’s impact on bank investors’ demand for LIHTCs. And while some qualitative data obtained through interviews of LIHTC industry participants and surveys of housing finance agencies suggested that CRA should increase demand for LIHTCs, other factors could influence investors’ decisions to invest in these partnerships. This, coupled with fact the GAO cited a lack of complete and reliable data about equity contributions and methodological challenges in performing the analyses, made it difficult for the GAO to quantify the extent of CRA’s effect on LIHTC equity contributions in its report.

“We believe CRA is a significant investment factor for those market participants subject to the investing requirements under CRA,” said Michael J. Novogradac, managing partner in the firm’s San Francisco office and the LIHTC Working Group’s advisor on industry and governmental affairs. “As such, in its letter the LIHTC Working Group respectfully requests that the GAO continue its efforts to obtain quantitative data on the effect of CRA, and other factors, on the market for LIHTCs.”

For more details and a copy of the letter, please go to The LIHTC Working Group was established by Novogradac & Company LLP in 2008 to provide a platform for LIHTC industry participants to work together to resolve technical and administrative LIHTC program issues. Members meet monthly via conference call to provide input regarding pending action items as agreed to by the members of the group. Comments and suggestions generated during the group discussions are agreed to and submitted in writing directly to Treasury, the Department of Housing and Urban Development and/or various state agencies. For more information, visit

Novogradac & Company LLP was founded in 1989, and has since grown to more than 300 employees and partners in offices in San Francisco and Long Beach, Calif.; the Washington, D.C., Atlanta, Ga., Detroit, Mich., Kansas City, Mo. and Seattle, Wash. metro areas; St. Louis, Mo.; Boston, Mass.; Austin, Texas; Dover, Columbus and Cleveland, Ohio; New York, N.Y. and Portland, Ore. Specialty practice areas include tax, audit and consulting services for tax-credit-assisted multifamily and affordable housing, community revitalization and rehabilitation of historic properties. Other areas of expertise include military base redevelopment, preparation and analysis of market studies and appraisals of multifamily housing investments and renewable energy tax credits.

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