Advocacy Needed! Ask your Senators & Reps to contact conferees about affordable housing

Advocacy Needed! Ask your Senators & Reps to contact conferees about affordable housing

November 16 was a monumental day for Republican tax reform advocates with the House of Representatives passing its tax reform bill and the Senate Finance Committee reporting its tax reform package.  H.R. 1, the Tax Cuts and Jobs Act, passed the House by a vote of 227-205, with 13 Republicans voting against the bill. The Finance Committee bill was reported by a vote of 14-12 after a partisan and sometimes rancorous debate.  No Democrats supported either bill.

As we reported earlier, the House bill retains the Low-Income Housing Tax Credit, but it also eliminates the tax exemption for private activity bonds (PABs), which would have a devastating impact on the production of affordable housing.  In addition, there are no modifications or enhancements to the credit that would help address the negative impact caused by lowering the top corporate rate to 20 percent. The bill also repeals the Historic Tax Credit (HTC) and the New Markets Tax Credit (NMTC) programs.

Regarding the PAB issue, there was a late push by Congressman Randy Hultgren (R-IL) to secure the PABs in the House bill.  He and a number of Republican colleagues offered an amendment to the Rules committee removing the PAB elimination from the House package.  As expected, it failed but their efforts were another strong indication to House Leadership that there is strong Republican support for PABs and specifically housing bonds.

The Senate Finance Committee proposal, like the House bill, features a permanent top corporate tax rate of 20 percent.  The bill retains the housing credit, and adds a number of enhancements from S. 548, the Affordable Housing Credit Improvement Act. These would:

  • Allow for a reasonable restoration period after a casualty loss.
  • Replace the existing nonprofit right of first refusal with a purchase option to help nonprofit sponsors keep properties affordable for the long term.
  • Clarify that state Housing Credit agencies have the authority to determine what constitutes community revitalization, with broad parameters, for purposes of determining whether properties are eligible for a basis boost by virtue of being located in a Qualified Census Tract and contributing to a “concerted community revitalization plan.”
  • Prohibit local approval and contribution requirements in order to prevent NIMBY opposition from interfering with Housing Credit development.
  • Require that states add a selection criteria to their Qualified Allocation Plans for housing that serves the needs of Native Americans.
  • Rename the Low-Income Housing Tax Credit to the “Affordable Housing Tax Credit.”

The bill does not include provisions that would increase LIHTC allocations or address the impact on the credit caused by the reduction in the corporate tax rate.  It does, however, retain private activity bonds, the NMTC through 2019, and the 20 percent HTC. The bill would require that the HTC be claimed ratably over a five-year period.

During the Finance Committee markup, there were several very positive bipartisan exchanges between supporters of the LIHTC.  Our LIHTC champion Senator Maria Cantwell (D-OR) spoke about the potential negative impact the underlying bill would have on affordable housing production, and urged Chairman Orrin Hatch (R-UT) to continue to work to ensure that the credit remains effective.  Chairman Hatch, our key Republican champion, agreed to work with her.  Senators Rob Portman (R-OH) and Charles Grassley (R-IA) offered their help in examining an international tax reform provision that impacts the ability of certain foreign held investors from claiming the LIHTC, NMTC and HTC.  The ACTION policy subcommittee is working on this issue along with representatives of the banking industry.

Senator Ben Cardin (D-MD) offered an amendment to enhance the LIHTC, NMTC, and HTC programs.  Senators Portman, Johnny Isakson (R-GA), and Mike Crapo (R-ID) spoke about the importance of the credit for affordable housing production.  Chairman Hatch noted the merits of the amendment, but said the cost made it impractical for inclusion.  The amendment was defeated, but Chairman Hatch suggested the provisions could be considered at a later time.  Chairman Hatch commented that there is a lot of Republican support for the LIHTC.

Senate Majority Leader Mitch McConnell has said he expects the full Senate to consider the tax package the week of Nov. 27.  We and our colleagues in the ACTION campaign are working with Senator Cantwell, as well as with Democratic and Republican supporters on the committee, on opportunities to improve the credit and ensure its effectiveness as the bill moves through the process.  The future of the bill and tax reform are very much up in the air as a number of Republican senators have voiced concern and in one case, outright opposition to the bill as it is currently constituted.

We have a ways to go before this is done and we will take every opportunity to have our remaining issues addressed in the final proposal.  Your continued assistance in this endeavor has made a difference.  We will of course keep you posted on future developments and when we will again need your assistance.

Have a wonderful Thanksgiving holiday.

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