The report, Unlocking Homeownership: Making LIHTC and Elective Pay Work for Cooperative Housing, proposes an amendment to the federal tax code that would allow housing cooperatives to directly access refundable Low-Income Housing Tax Credits (LIHTC) through an Elective Pay mechanism.
While the LIHTC program has helped create more than 4 million affordable rental homes and served over 9 million low-income households since 1986, it does not currently support permanently affordable homeownership. This white paper addresses that gap by proposing a targeted federal policy fix to expand the nation’s primary affordable housing development tool to include and advance limited-equity cooperative housing, ensuring that affordable homeownership can be preserved for generations.
NCB’s mission is to finance and support cooperative housing that expands access to affordable homeownership and strengthens communities,” said Casey Fannon, president and CEO of National Cooperative Bank. “Modernizing LIHTC to include Elective Pay for housing cooperatives aligns federal policy with that mission. It will empower member-owned communities, preserve long-term affordability, and ensure that working families have a meaningful pathway to homeownership — not just for today, but for generations to come.
A missed opportunity in federal housing policy
Under current law, LIHTC properties are generally required to remain affordable for 30 years, but enforcement mechanisms weaken after 15 years, creating potential affordability cliffs. At the same time, cooperative housing—which can preserve affordability across generations through limited-equity structures—lacks direct access to the credit.
The report outlines how extending Elective Pay treatment to LIHTC would:
• Provide direct tax credits to eligible housing cooperatives
• Lower development costs and accelerate project timelines
• Support permanent affordability and shared equity ownership
• Preserve expiring LIHTC properties through cooperative conversion
• Create parity in access to capital for member-owned housing models
Recent research cited in the report suggests that investing in shared-equity models could unlock up to 500,000 new housing units between 2025 and 2034.
The legislative path forward
The report includes a proposed policy framework that would amend the Internal Revenue Code to allow cooperative housing corporations to elect direct payment of housing tax credits.
The proposal builds on the successful implementation of Elective Pay for clean energy tax credits authorized under recent federal legislation, which enabled nonprofit and cooperative entities to access refundable credits directly from the U.S. Treasury.
“For more than a century, cooperatives have partnered with the federal government to solve urgent national needs—from rural electrification to agricultural market acess and financial inclusion,” said Doug O’Brien, president and CEO of National Cooperative Business Association CLUSA International.
“Housing affordability is one of today’s defining economic challenges. Cooperative housing is a proven but underutilized tool to create permanently affordable homes and build community wealth. Congress should ensure this model has equal access to federal housing tools. An elective pay option would lower costs, expand supply and continue the American tradition of leveraging smart, bipartisan federal policy to help cooperatives meet the moment.”
Preserving affordability across generations
Housing cooperatives currently provide homeownership opportunities to approximately 250,000 households nationwide. Unlike traditional LIHTC rental properties, limited-equity cooperatives can preserve permanent affordability by restricting resale prices and income eligibility.
NCB and NCBA argue that pairing LIHTC with Elective Pay would rebalance federal housing support, ensuring that renters and aspiring homeowners both benefit from federal investment.
“LIHTC will continue to serve renters,” the report concludes. “Elective Pay should now serve homeowners. Together, they can provide a full spectrum of affordable housing solutions.”
The full report is available at: https://impact.ncb.coop/hubfs/assets/resources/Unlocking Homeownership Whitepaper Final.pdf
About National Cooperative Bank:
National Cooperative Bank is dedicated to strengthening communities nationwide through the delivery of banking and financial services, complemented by a special focus on cooperative expansion and economic development. NCB provides financial products and services for the nation’s cooperatives, their members, and socially responsible organizations. To learn more, visit www.ncb.coop, National Cooperative Bank on Facebook and Instagram, or on X @natlcoopbank.
About NCBA CLUSA
The National Cooperative Business Association (NCBA CLUSA) is the trade association for cooperative businesses in the United States and a development organization that helps people and communities thrive through the cooperative business model. In our work to develop, advance and protect cooperative enterprise, we envision an inclusive economy that empowers people to build shared prosperity and well-being for themselves and future generations. To learn more, visit ncbaclusa.coop or follow @NCBACLUSA on social media.