EPISODE · Feb 5, 2026 · 3 MIN
Episode 28: 25% PAB Threshold Takes Effect — States Implement New Rules
from The Spring Street Brief · host Spring Street Management Group
The reduced private activity bond financing threshold—from 50% to 25% of aggregate basis—took effect January 1, 2026, unlocking significant additional 4% LIHTC production capacity.What Changed:Previous threshold: 50% of aggregate basis in bond financing requiredNew threshold: Only 25% bond financing needed for 4% LIHTC eligibilityResult: Less bond volume cap consumed per projectImpact: States can finance more deals with same allocationState Implementation Approaches:California: Encouraging return of unused 2025 PAB allocations for redeploymentColorado: Phasing in threshold, starting at 45% upper limit for 2026 roundsOther states: Updating QAPs and application materialsDeveloper Implications:Acquisition-rehab deals can proceed with smaller bond issuancesImproved project economics through reduced debt serviceNew opportunities in bond-constrained statesWork closely with bond counsel on state-specific requirementsSubscribe to The Spring Street Brief for daily affordable housing news covering PABs, 4% LIHTC, bond financing, and state HFA implementation.]]>
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What this episode covers
The 25% private activity bond threshold for 4% LIHTC took effect January 1, 2026. States implementing new rules—California, Colorado, and others adapting programs.
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Episode 28: 25% PAB Threshold Takes Effect — States Implement New Rules
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