As the affordable housing industry looks ahead to 2026, December’s Low-Income Housing Tax Credit (LIHTC) allocations offer a snapshot of where development momentum is heading. Recent awards across Florida, Georgia, New Jersey, and Iowa highlight how capital is gravitating toward jurisdictions with coordinated public funding, how developers are prioritizing deeper affordability for vulnerable populations, and why increasingly complex financing structures are becoming the baseline for project feasibility.
Capital Is Concentrating Where Public Funding Aligns
One of the clearest signals from December’s LIHTC allocations is that capital continues to favor jurisdictions where local, state, and federal funding are layered. For example, an affordable housing development in Florida, Archway Partners’ Flats on Fourth, combines 4% LIHTCs and bonds with ARPA funds, state incentives, and National Housing Trust Fund dollars to offset rising costs, as noted by Novogradac. A similar pattern appears in Georgia, where pairing 9% LIHTCs with local gap financing has proven critical to competitiveness, according to the Georgia Department of Community Affairs.
Deeper Affordability Is Becoming a Priority
December’s awards highlight a continued shift toward deeper affordability, particularly for seniors, veterans, and extremely low-income households. In New Jersey, The Residences at Choctaw reserves about 20% of units for households earning 30% of area median income, supported by LIHTCs, state gap funding, and Federal Home Loan Bank financing. In Iowa, Woda Cooper Companies’ Alley Landing pairs LIHTCs with HOME funds and project-based vouchers to deliver permanent supportive housing for veterans, reflecting HUD’s broader push to align affordable housing with supportive services.
Complex Capital Stacks and Federal Policy are Shaping 2026 Pipelines
Across all four states highlighted in December’s LIHTC activity, multi-layered capital stacks have become standard practice, with projects routinely combining LIHTCs, tax-exempt bonds, HOME funds, ARPA dollars, state and local gap financing, and other public funding sources to remain financially viable. As development and operating costs continue to rise, these layered structures are necessary to close financing gaps and manage risk, even for smaller or mid-sized projects. At the same time, developers are underwriting earlier and more conservatively around evolving federal policy considerations, including HUD’s 2026 Difficult Development Area and Qualified Census Tract designations, which can significantly impact eligible basis and equity, as well as Treasury’s corrected 2026 LIHTC state credit ceiling calculations under Revenue Procedure 2025-32. Together, these factors are shaping how developers plan, finance, and time projects heading into 2026.
Conclusion
December’s LIHTC activity offers a clear preview of the forces shaping affordable housing development in 2026, including greater reliance on coordinated public funding, a continued emphasis on deeper affordability, and increasing complexity driven by policy and market pressures. As federal and state policies continue to evolve, staying informed and prepared will be essential for sustaining affordable housing production. ProLink is ready to respond to policy changes and support our state partners and the broader affordable housing industry as these trends continue to shape the year ahead.
