The Low Income Housing Tax Credit, which has been in the federal tax code since the early 1990s, is used for both construction of new housing units and the rehabilitation of existing low-income housing complexes.

The Michigan State Housing Development Agency administers the low-income housing tax credit program in communities across the state.

Both the Senate and House plans preserve a 9 percent tax credit for low-income housing. But that credit restricts how much MSHDA can award each year based on the state's population.

The state awards about $23 million in 9 percent low-income house credits annually and another $5 million in new 4 percent credits, said Andy Martin, director of rental development at MSHDA.

Since the credits are good for 10 years, the two low-income housing tax credits amount to $280 million annually in subsidies for housing projects, Martin said.

Investors buy the credits for about 90-92 cents on the dollar, generating construction cash for developers, Martin said.

If corporate tax rates are lowered, banks and corporations would have less need for buying low-income housing tax credits.

"There would be ultimately some impact on the pricing," Martin said. "We would see that number go down, which would ultimately impact the production that comes from the credit."

Housing industry groups predict the production of low-income housing could decline by 40 percent annually based on the proposed changes, said Ethan Handelman, acting CEO of the National Housing Conference, a Washington, D.C.-based affordable housing advocacy group.

"Detroit's one of the places where you would expect 4 percent credits and bond financing to really go far," said Handelman, a native of Southfield. "This is a place where land costs are still pretty reasonable, where construction costs are not through the roof."

The House's proposed elimination of the 4 percent credit could leave the owners of aging housing complexes with fewer options for rehabilitating units and keeping rents low, Seybert said.

"If that tool is cut, we are going to preserve less affordable housing year after year," Seybert said. "That will impact Detroit. That will impact Alpena [and] ... every city in the country."

Without new credits to preserve the subsidized rate structures for low-income individuals and families, those apartment complexes could go back to leasing units at market rate, displacing residents, Handelman said.

If the Senate accepts the House's elimination of 4 percent low-income tax credits, Handelman predicted the 9 percent tax credit would be used less efficiently.

"It would compound the situation," Handelman said. "The demand for 9 percent credits would increase, the supply of them wouldn't and they wouldn't be going as far."