DC Council Pushes Tax Credits to Boost Affordable Housing in Wards 7, 8

The DC Council took a key step forward this session on legislation to incentivize affordable housing development through enhanced tax credits targeted at Wards 7 and 8, where vacancy rates hover below 5% and median rents exceed $2,000 monthly. Councilmember Kenyan McDuffie (D-Ward 5), chair of the Committee on Business and Economic Development, introduced the bill following initial reporting by The DC Line, proposing credits for developers committing at least 20% of units to households earning 50% or less of area median income. The measure aligns with the Department of Housing and Community Development's (DHCD) administration of the federal Low-Income Housing Tax Credit (LIHTC) program, which has allocated credits annually since the 1986 Tax Reform Act to spur private investment in rental projects.

Building on D.C. Law 26-72, the LIHTC Rent Stabilization Exemption Clarification Temporary Amendment Act of 2025, the new bill clarifies exemptions for LIHTC-financed units from rent control, ensuring developers viability without citywide caps. Enacted earlier this year, Law 26-72 amended the Rental Housing Act of 1985 to explicitly exempt such properties, addressing prior ambiguities that deterred investment. The FY 2025 budget underscores D.C.'s commitment, allocating $1.1 billion locally for affordable housing—$967.9 million for direct resident services—plus $620 million over five years via capital budgets to fight homelessness and expand supply.

Proponents argue the incentives will accelerate production in underserved areas, mirroring national pushes like the bipartisan Affordable Housing Credit Improvement Act of 2025, which seeks to boost 9% LIHTC allocations by 50% for new construction. DHCD's Qualified Allocation Plan prioritizes projects in high-need wards, requiring 30-year affordability commitments post-10-year tax claims. With over 536.8 million dedicated to homeless services in FY 2025, the council aims to retain low-income residents amid gentrification in neighborhoods like Anacostia and Congress Heights.