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/ Wednesday, July 6, 2022
Ricardo Álvarez-Díaz,
Licensed Architect and co-founder of the architectural firm Álvarez-Díaz & Villalón www.advfirm.com
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CDBG-DR Gap LIHTC program: a solution for the affordable housing crisis
he reduction in adequate housing caused by informal construction and the destruction of the hurricanes, combined with a wave of displaced residents in need of housing, represents a major obstacle to Puerto Rico’s long-term recovery. The CDBG-DR Gap for Low Income Housing Tax Credits (LIHTC) Program was launched with the purpose of promoting the construction and rehabilitation of homes for families or elderly people on the island, and has since been crucial in the construction of thousands of housing units in Puerto Rico. The CDBG-DR Gap for LIHTC provides gap funding for properties being developed with low-income tax credits. It is financed with funds allocated by the U.S. Department of Housing and Urban Development (HUD), and distributes federal income tax credits to affordable housing developers through state housing agencies. The developers sell the tax credits to investors to get funding for their projects. For each dollar invested on tax credits, investors save one dollar in taxes. The LIHTC Program essentially works through three different entities. The first entity is the Puerto Rico Department of Housing (PRDOH). They are responsible for managing the CDBG-DR funds assigned to the island for the recovery of the
disasters caused by Hurricanes Irma and María in 2017. The second is the Puerto Rico Housing Finance Authority (PRHFA), which manages CDGBDR funds to encourage affordable multi-family and/or senior rental housing construction through LIHTC project developer financing. And finally, the last entity is the developers who rehabilitate, redevelop, and manage the projects themselves.
LIHTC Programs accelerate Puerto Rico’s recovery and allow for more people to have a safe and resilient home. Additionally, proposed projects that will be built under the LIHTC Program, take into consideration the use of materials and methods that promote the protection of the environment with the implementation of resiliency measures like EnergyStar® equipment, photovoltaic panels, emergency power generators, and security windows, among others. Furthermore, the LIHTC Program benefits the
regional economy by supporting projects in areas that are within a reasonable distance of businesses, medical facilities, pharmacies, post offices, supermarkets, public transport, and recreational areas of the municipalities. In our company, we’ve had the opportunity to help build affordable and resilient rental homes in Puerto Rico through the CDBG-DR Gap LIHTC Program. Our most recent project in Caguas, Emerald Vista, is a resilient community where everyone feels safe, connected, and proud. By working on this project, we have seen firsthand, how the LIHTC Program benefits people with low to moderate income living in the Island. The LIHTC Program was described by HUD as “… the most important resource for developing low-cost housing in the United States and Puerto Rico,” as it will benefit low to moderate income communities by increasing the number of affordable homes through new construction or rehabilitation projects. This promotes economic development, creates quality rental housing, and responds directly to the needs for housing by providing financing to viable construction projects. Fundamentally, LIHTC Programs accelerate Puerto Rico’s recovery and allow for more people to have a safe and resilient home increasing their access to economic opportunities. The author is a licensed architect and entrepreneur.
