Provision in ‘Big Beautiful Bill’ could increase Nevada’s affordable housing stock

A provision buried in President Donald Trump’s sprawling megabill could catalyze future affordable housing development in Nevada.

The One Big Beautiful Bill Act lowers the threshold for affordable housing developers to qualify for federal, noncompetitive Low-Income Housing Tax Credits and increase the amount of competitive credits available by 12 percent. Consulting firm Novogradac predicts these changes could result in the financing of 1.22 million additional affordable rental homes by 2035.

“Without a doubt, more needs to be built,” said Audra Hamernik, president and CEO of affordable housing developer Nevada HAND. “We are the very worst in the nation when you look at the amount of affordable housing needed.”

The National Low Income Housing Coalition’s 2025 Gap report granted Nevada the dubious distinction of having the worst affordable housing shortage in the U.S., with 17 affordable and available homes for every 100 extremely low-income households.

Affordable housing advocates have long lobbied Congress to reduce the bond financing threshold, making the recent development a historic victory, said Lorri Murphy, chair of the Nevada Housing Coalition’s board of directors.

“This has always been a bipartisan issue, and I don’t know why it was included in this bill and not in others, but we’re certainly happy to see it,” Murphy said.

A bond balancing test

Since the Tax Reform Act of 1986, the treasury department has awarded Low-Income Housing Tax Credits to states as an incentive for developers to set aside affordable units in new developments. Developers often sell these credits to investors, in exchange for equity, to cover construction costs. State housing finance agencies, including the Nevada Housing Division, administer the program, which finances about 90 percent of new affordable rental housing in the U.S.

To qualify for the credits, developers have needed to fund at least 50 percent of the project with tax-exempt bonds. States issue these bonds to investors in order to allow developers to borrow money at lower interest rates. Starting in 2026, the eligibility threshold will drop to 25 percent, which will allow more affordable housing projects to access federal aid.

“It’s absolutely a necessary thing, and it will eventually lead to more affordable housing,” Murphy said.

Tax-exempt bonds allow developers to borrow money at lower interest rates. The new threshold is a floor, not a limit — states may continue to issue bonds covering more than 25 percent of affordable housing projects, according to UNLV Professor Nicholas Irwin, director of the Lied Institute for Real Estate.

The result is a balancing test. Like other housing authorities, the Nevada Housing Division will need to decide whether it will spread its available funding across more projects or issue more bonds to each project, in hopes of improving their chances of success.

Murphy said investors prefer projects that receive more than the bare minimum — which can signal the state’s confidence in a project — which could encourage the state to issue bonds above the 25 percent threshold.

However, both Hamernik and Murphy caution that Nevada is nearing a shortage in its volume cap: the maximum amount of tax-exempt bonds it can issue each year. That could push the Housing Division to decrease its per-project bonds, in order to meet demand for scarce bonds.

“We have to find other low income sources to fill that gap,” Hamernik said.

To cover the difference, Murphy said, developers may also need to secure additional taxable bank loans. Because the loans come with higher interest rates, such moves could marginally increase development costs for affordable housing.

The financing change is not a silver bullet — it will likely lead to more affordable housing in the long-term, but without additional low-interest sources, it could also slightly increase costs.

Nevada’s “attainable housing” bill — Assembly Bill 540 — could help keep costs down. The bill would provide $133 million in state support for attainable housing projects, but Hamernik said that won’t be enough to cover the difference created by the revision to the bond financing threshold.

The Nevada Housing Division canceled a scheduled interview with the Review-Journal, citing a cyberattack that paralyzed several state agencies, and did not respond to a subsequent request for comment by the time of publication.

‘A long time frame’

Nevadans seeking affordable housing may need to wait a few years for new developments to flood the market, according to Murphy and Irwin.

While think tanks produce varying estimates, two years is a conservative average length from announcement to ribbon-cutting for an affordable housing development, and some projects take much longer.

“Tomorrow, houses won’t be cheaper — there won’t be more affordable housing — even in a year. But in a couple years, there could be,” Irwin said. “Political cycles are much shorter than housing cycles.”

Contact Isaiah Steinberg at isteinberg@reviewjournal.com. Follow @IsaiahStei27 on X.