Blodgett on Quiet Affordable Housing Finance Reform

The Low-Income Housing Tax Credit, or LIHTC, has financed the construction or preservation of more than four million affordable homes since 1986, acting as the primary driver for most of the housing built in America over the past four decades. The credit, which functions through a system where state agencies allocate tax credits to developers who agree to build or preserve affordable housing at capped income and rent levels, has quietly transformed the affordable housing sector after federal direct-appropriation programs contracted in the early 1980s.

Developers sell the credits to investors, who claim them against corporate tax liability, and the cash generated becomes equity in the deal. This structure relies on blended public and private capital, producing units without a direct line-item federal appropriation. Will Blodgett, the founder and CEO of Tredway, calls the credit “the most powerful tool that we have in America for affordable housing” and argues that its preservation side is where some of the most consequential work is currently being done.

Tredway, ranked the tenth most active affordable housing developer in the country for 2025, operates in 11 states and is on track to own more than 20,000 affordable homes by the end of 2026. The firm concentrates on preserving existing stock, a strategy that ensures families remain housed rather than losing their homes to market-rate conversion when affordability periods expire. The mechanics of the credit are technical, but the impact is visible in specific neighborhoods where stability has been maintained through this tax policy.

Blodgett has pointed to specific recent reforms that have made the credit more effective. The Consolidated Appropriations Act of 2021 fixed the 4 percent LIHTC floor at 4 percent, ending a floating-rate structure that had reduced the effective subsidy. Two years later, the 2023 act reduced the so-called 50 percent test, the minimum bond-financing threshold, to 25 percent for qualifying projects. These changes expanded access to 4 percent credits for both new construction and preservation.

Tredway has closed deals using these updated structures, including the Coney Island portfolio, a 1,096-apartment acquisition in 2025, and the Ocean Park Apartments in Far Rockaway, a 602-unit family property. The firm also acquired approximately 1,602 affordable homes from the Archdiocese of New Orleans, extending affordability commitments for at least forty years. These transactions rely on combinations of 4 percent or 9 percent credits, tax-exempt bonds, project-based Section 8, and state or local subsidies.

Blodgett notes that the housing crisis the credit addresses has grown. Approximately half of all American renter households are now cost-burdened, paying more than 30 percent of income on rent, with roughly one in four severely cost-burdened. While the credit is not without flaws, its ability to leverage private capital to maintain long-term affordability has made it a rare policy success story. Advocates have called for further expansion, including higher per-state allocations and simplified compliance requirements for smaller nonprofits, but the current framework remains the backbone of affordable housing production.

The credit operates on a model similar to a modernized version of “philanthropy plus 5 percent.” Investors receive a modest return, developers acquire and preserve properties, and residents receive affordability commitments that often last longer than a generation. This approach allows the sector to produce housing without direct federal appropriation, relying instead on the stability of the tax code to fund stability for families.

Every time a LIHTC year 30 arrives—the moment a property’s original affordability period expires—the choice to extend or lose that affordability creates a critical moment for the sector. Preservation-focused firms like Tredway step in to extend commitments by another thirty or forty years, keeping families in their homes. The credit’s next round of thoughtful expansion will determine how many more families across the country retain access to affordable housing.