Affordable housing projects are often financed through a mix of federal, state, and local resources. One of the most important tools in this mix is the Low-Income Housing Tax Credit (LIHTC) program.

What is LIHTC?

The Low-Income Housing Tax Credit (LIHTC) is a federal program created by Congress in 1986 to encourage private investment in affordable housing. Instead of direct government funding, LIHTC provides tax credits to developers who agree to build or preserve housing that is affordable to households at certain income levels.

Developers sell these tax credits to investors, raising equity (cash) that reduces the amount of debt needed to finance the project. With lower debt, the housing can charge lower rents while still covering costs like construction, maintenance, and operations.

Why is LIHTC Important?

• Largest source of affordable housing financing in the U.S. – LIHTC has helped finance more than 3.5 million affordable homes nationwide since its creation.

• Keeps rents affordable – In exchange for tax credits, property owners must keep rents affordable for low- and moderate-income households, often for at least 30 years.

• Supports community needs – LIHTC projects often include a mix of unit sizes and can target specific populations like seniors, veterans, or families.

Types of LIHTC

• 9% Competitive Credits – Highly competitive and typically cover a larger share of development costs (up to ~70%).

• 4% Non-Competitive Credits – Paired with Private Activity Bonds (PABs), these credits are not competitive and cover a smaller share (~30%) of costs, but are critical for financing larger projects like the Salt Flats in Grand Junction.

How does LIHTC work locally?

In Grand Junction, both the City of Grand Junction and Mesa County contribute their Private Activity Bond (PAB) allocations to help unlock 4% LIHTC for major affordable housing projects. This is why LIHTC is so important — it leverages local resources to bring in millions of dollars in federal investment for housing.

Where can I learn more?

• U.S. Department of Housing and Urban Development (HUD): LIHTC Overview

• National Council of State Housing Agencies (NCSHA): Understanding LIHTC

• Colorado Housing and Finance Authority (CHFA): Colorado’s LIHTC Program

• Local Information: Visit the City of Grand Junction Housing Division for updates on Salt Flats and other affordable housing initiatives.

✅ In summary: LIHTC is a powerful financing tool that brings public and private resources together to make affordable housing possible. It reduces costs for developers, ensures long-term affordability for residents, and helps communities like Grand Junction meet the growing need for safe, stable housing.