On May 12, 2020, House Democrats rolled out a major COVID-19 relief package providing additional emergency assistance to address health and economic issues related to the pandemic. The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act provides $3 trillion in assistance, including direct aid to state and local governments, another round of direct payments to individuals, modifications to the Paycheck Protection Program, and assistance for first responders and front-line workers, among other provisions. The revenue titles in the bill do not provide industry-specific relief, and as such do not include our LIHTC provisions. The bill (summary here) does include a number of measures providing supplemental resources for housing, including:
- $100 billion for emergency rental assistance;
- $4 billion for tenant-based rental assistance;
- $2 billion for the public housing operating fund;
- $5 billion for Community Development Block Grant funding;
- $750 million for project-based rental assistance;
- $1 billion for the Community Development Financial Institutions (CDFI) Fund;
- $11.5 billion for Homeless Assistance Grants;
- $700 million for rural rental assistance,
- $200 million for housing for persons with disabilities; and
- An extension and expansion of the CARES Act eviction moratorium for 12 months.
The affordable housing industry worked diligently to include housing assistance (above) as well as our LIHTC agenda. We want to be clear that there is widespread support for the LIHTC from Speaker Nancy Pelosi (D-CA), Ways and Means Committee Chairman Richard Neal (D-MA) and throughout the House, with many of our congressional allies advocating for our agenda with the Speaker and Chairman Neal. What became apparent in our conversations with leadership and staff is that this package was again going to focus on issues they see as emergencies throughout the economy and society. We endeavored to make the case that the 4% LIHTC is unique among tax credits as it is the only one linked to federal borrowing rates. The declining AFR resulting in a 3.08% rate for the 4% LIHTC was a direct result of the COVID-19 pandemic and the resulting decline in value of the credit and subsequent inability to finance developments is therefore an emergency. They were sympathetic to this argument but as we noted above, the final tax provisions benefitted no specific industries and no industry-specific tax credits were addressed in the package.
We have not given up on the package and will be working with our Senate allies to include the fixed 4% LIHTC in the course of negotiations with the House. We never assume anything, especially when dealing with Washington, D.C., but we are optimistic our LIHTC agenda will be addressed now or when Congress moves to the recovery phase of COVID-19 legislation.
While the HEROES Act could be voted on by the House as early as Friday, May 16, its progress is expected to slow down in the Republican-controlled Senate. Majority Leader Mitch McConnell (R-KY) has been reluctant to press for immediate legislation, expressing concerns about the substantial increase in the deficit from previously passed COVID-19 bills. He suggests Congress should assess the impact of the first four COVID-19 emergency bills before moving forward with additional relief. He also has made it clear that a Senate package would have to include a provision providing employer liability protection for businesses bringing employees back to the worksite. Administration officials also have voiced support for assessing the results from previous COVID-19 relief before moving ahead. And, President Trump is insisting that any legislation must include a payroll tax cut, a proposal that has drawn criticism from Members of Congress on both sides of the aisle.
As we noted earlier, we continue to work hard with our Hill champions to include our LIHTC priorities in any appropriate legislative vehicle, and are partnering with the industry to provide specific State and District examples showing the urgent need for action. We appreciate your quick response in providing this information, and your personal contact with your elected officials. These real-life examples have been critical in making our case to Members of Congress. As always, we will keep you posted on any developments and encourage you to touch base with us as we forge on.