Tax reform bill threatens affordable housing production
On November 2, 2017, the House Ways and Means Committee released its highly-anticipated tax reform bill, which is seen as the starting point for negotiations. Titled the “Tax Cuts and Jobs Act,”
H.R. 1 retains the Low-Income Housing Tax Credit (LIHTC) program itself, but eliminates private activity bonds, including Multifamily Housing Bonds, which allow bond-financed multifamily projects to access 4% Housing Credits.
Over half of Housing Credit developments utilize tax-exempt bonds and 4% Housing Credits; eliminating the tax exemption would eliminate these transactions after 2017. Coupled with the significantly lower corporate rate of 20% – which would reduce investor interest in the Housing Credit in the absence of offsetting reforms to the program – the loss of Housing Bonds could reduce annual production by up to two-thirds.
The House bill also currently does not include any of the bipartisan provisions in the Tiberi-Neal “Affordable Housing Credit Improvement Act” (H.R. 1661), which would make no- or low-cost strides toward making the LIHTC program more streamlined and flexible. The bill also cuts in half the allowable mortgage interest deduction for newly purchased homes.
Over the weekend, Chairman Brady (R-TX) will likely develop a “Chairman’s mark” of the bill in advance of the House Ways and Means Committee’s mark-up, which begins on Monday, November 6
th. The Senate is expected to release its own version of a tax reform bill as early as next week, although the difference between chambers is expected to be significant.
With a goal of passing tax reform legislation through the House and Senate before Thanksgiving, now is a critical time to weigh in with your Members of Congress, particularly lawmakers on the House Ways and Means Committee, with this urgent message:
TELL CONGRESS: Preserve the tax exemption on multifamily Housing Bonds
- Over half of LIHTC developments utilize tax-exempt bonds and 4% Housing Credits; eliminating the tax exemption for private activity bonds could reduce annual LIHTC production by up to two-thirds
TELL CONGRESS: Offset the impact of a lower corporate rate
- Make adjustments to offset the impact of a lower corporate tax rate on LIHTC investment to ensure that the amount of Housing Credit equity per development is not substantially decreased
TELL CONGRESS: Strengthen and expand the Housing Credit
- Include bipartisan provisions to strengthen the Housing Credit from the Tiberi-Neal “Affordable Housing Credit Improvement Act” (R. 1661)
- Include provisions from the “Access to Affordable Housing Act” (R. 4185), which expands the LITHC program by 50% over 10 years.
TELL CONGRESS: Affordable Housing production is critical for communities and industry
- Please send this tax reform statement to your Representatives on the House Ways and Means Committee, which released the tax reform bill this week, to let them know that the LIHTC is critical for both the industry and the communities they represent
For more information on contacting your legislators regarding tax reform, please see NAHMA’s recent
grassroots alert or contact NAHMA’s
Government Affairs team.
Washington lawmakers introduce Housing Credit expansion bill
Congresswoman Suzan DelBene (D) of Washington’s first District introduced legislation this week to increase the Low-Income Housing Tax Credit (LIHTC) by 50%, which could result in as many as 400,000 more affordable housing units over 10 years.
Titled the “Access to Affordable Housing Act,” H.R. 4185 mirrors a provision included in the Senate version of the popular Cantwell-Hatch bill to strengthen and expand the Housing Credit program – a provisions omitted from the House counterpart to the legislation, introduced by Representatives Tiberi (R-OH) and Neal (D-MA).
“Making sure that every American has a safe and affordable place to call home is a moral imperative that we must address,” Representative DelBene said. “To help lift families out of poverty and expand access to affordable housing, we need to increase the Low Income Housing Tax Credit. Washington has seen it firsthand, housing options are not keeping pace with demand and my legislation would help ensure more families can find stable, affordable housing.”
Reps. Adam Smith (WA-09) and Pramila Jayapal (WA-07) are also original cosponsors of DelBene’s bill. According to the Congresswoman’s
press release, nearly 400,000 Washington households pay half their income in rent.
