By Ivy Dench-Carter

Partnering with State Housing Finance Agencies to Streamline Production & Deliver Long-Term Affordability

For years, our country has been grappling with an extreme shortage of high-quality, affordable housing.

The National Low Income Housing Coalition reports staggering statistics: there is a deficiency of more than seven million affordable homes for low-income families and 70% of families are severely cost-burdened by rent. Unfortunately, the country’s affordability crisis isn’t something we can simply build ourselves out of – moving the needle will require creative, cross-sector, and multi-faceted solutions.

One important mechanism to help improve housing supply is to streamline how Low-Income Housing Tax Credit (LIHTC) developers are working with state housing financing authorities.

The five recommendations below discuss how these collaborative partnerships, if optimized, can increase housing production and supply, ensure long-term affordability, and improve operational efficiency for the families we serve.

1. Revisit Design Standards & Criteria

Many LIHTC design standards exceed what is actually required to deliver healthy, safe, and durable housing. These overly prescriptive criteria often lead to unnecessary construction costs – an issue intensified by ongoing supply‑chain disruptions and tariff uncertainty.

Additionally, agency design review requirements often exceed building codes, and begin late in the predevelopment process, which can result in expensive redesigns and project delays.

Our solution: State agencies should conduct a comprehensive review of their Qualified Allocation Plans (QAPs) and related design/construction standards to eliminate unnecessary or duplicative criteria. Streamlining reviews, ideally by using a single third‑party reviewer early in the process, would reduce costs, increase predictability, and shorten development timelines.

2. Accelerate Housing Credit Approval

Understandably, state agencies have varying levels of time and capacity to review and approve applications, meaning timelines can vary significantly from state to state. In the most extreme cases, when review and approvals take a year or more, the impact on total development costs can be considerable. There is also wide variation among state agencies regarding transparency and communications with developers throughout the review and approval process.

Our solution: Predictability ensures faster closings and less replication of work. States should take steps to accelerate approvals for housing credits and tax-exempt bonds based on procedures that have been successfully adopted in other jurisdictions.

For example, in Texas, allocations are typically issued within 90-120 days of application submission and North Carolina’s project update process is completely online, has clear instructions, easy document uploading requirements, and offers responses to inquiries within days.

3. Encourage Larger Developments

For affordable housing developers, the pressure to manage limited resources and support as many deals as possible has led to smaller projects. Fixed transaction costs, including application fees, syndication fees, and legal fees, result in smaller scale projects that are more expensive per unit and less efficient to develop and manage. Also, land and construction costs are typically higher on a per-unit basis for smaller projects.

Our solution: State agencies could consider reevaluating their restrictions on allocation caps in both the credit and bond programs. Supporting larger projects is a more effective use of resources and delivers more housing opportunities to communities in need.

 Additionally, we recommend that deals be evaluated on both a credits-per-unit and credits-per-bedroom basis to recognize the added cost of producing units with multiple bedrooms.

4. Prioritize Preservation

As the LIHTC program enters its 40th year, more properties are at risk of losing affordability restrictions, which eliminates income limits and weakens tenant protections. Prioritizing preservation offers meaningful benefits: shorter development timelines, fewer resident disruptions, and lower overall project costs compared to new construction.

Our solution: With the new 25% threshold, which is intended to expand affordable housing production by freeing up bond volume cap, state agencies should dedicate a portion of volume cap to recapitalize aging affordable housing stock.

For decades, state housing credit agencies have partnered with developers to successfully create homes for low‑ and moderate‑income families, but the scale and complexity of today’s developments continue to grow.

As development teams grapple with a more complex housing landscape, the above recommendations will help support producing the greatest number of high-quality, affordable rental apartments in the most cost-effective and efficient way possible.