Regional Housing Legal Services (RHLS) submitted recommendations to the Pennsylvania Housing Finance Agency (PHFA) that aim to improve the Affordable Housing Tax Credit (AHTC), a key source of funding for affordable housing in Pennsylvania. Established by the General Assembly in 2025, the AHTC builds on Pennsylvania’s earlier state housing tax credit by converting state tax credits into a dedicated funding stream for affordable housing. Through the AHTC, PHFA is authorized to sell up to $10 million annually in state tax credits in a wholesale model, with proceeds awarded to eligible affordable housing developments to help close persistent financing gaps.

Our nonprofit affordable housing development clients rely on AHTC funds to supplement the Low-Income Housing Tax Credit (LIHTC) - the primary federal tool for creating and preserving affordable housing and we see strong potential for the AHTC to also support smaller affordable housing developments that are not feasible under the LIHTC program. As the cost to create or preserve affordable housing continues to rise, access to a flexible state funding source is increasingly important.

Nine other organizations including nonprofit affordable housing developers, social service providers, housing advocates, and a local municipality joined us to call for the following key recommendations:

  • Create a set aside of AHTC Program Funds for the preservation of existing affordable housing.
  • Prioritize funding for rural development and supportive housing.

Additional recommendations provided solely by RHLS include the following:

 

  • Allow greater flexibility in tax credit disbursement agents to better align with standard construction lending practices.
  • Remove the requirement for PHFA to be first in the “annual cash-flow waterfall” and take a more flexible approach to cash flow distribution, especially for nonprofit developers.
  • Commit to the reinvestment of repayment proceeds to strengthen the sustainability of the program.
With these changes, the AHTC can support an environment where organizations supporting communities throughout PA can have equitable access to capital for affordable housing development and preservation. We appreciate the opportunity provided by PHFA to provide feedback on this vital program.

If you would like to join RHLS in advocacy opportunities to support affordable housing development and preservation in the future, please reach out to Deanna Dyer, Director of Policy, at deanna.dyer@rhls.org.