As we reported earlier this month, House Democrats are moving forward on a broad and massive infrastructure package (H.R. 2, the Moving Forward Act) that is expected to be voted on before the July 4th recess. The $1.5 trillion plan includes initiatives addressing traditional infrastructure needs such as roads, bridges, and mass transit, but H.R. 2 also includes green energy, education, clean water, broadband initiatives, and a significant portion of our affordable housing agenda. View the package’s section-by-section breakdown and fact sheet.
We are very pleased that Ways and Means Committee Chairman Richard Neal (D-MA) reaffirmed his strong support for expanding the LIHTC in this legislation. H.R. 2 includes a number of very important provisions from the Affordable Housing Credit Improvement Act (AHCIA), including the following:
- Establishes a permanent 4% credit rate, effective for buildings receiving allocations/determinations and placed in service after December 31, 2019.
- Increases the annual 9% credit allocation from $2.81 per capita to $4.56 per capita, and an increase in the small state minimum from $3,217,500 to $5,214,051 – phased in over 2 years.
- Provides up to a 30% basis boost for rural areas and Native American areas.
- Provides up to a 50% basis boost for developments serving extremely low-income tenants and provides a separate 10% increase above the state’s annual election for those developments.
- Allows state housing agencies to designate properties financed with tax-exempt bonds as eligible for a 30% basis boost.
- Prohibits local approval and contribution requirements.
In addition, H.R. 2 includes the following:
- Reduces the 50% bond financing threshold for 4% credit developments to 25%.
- Provides LIHTC deadline relief for the 10% test deadline and for the rehabilitation expenditure deadline.
- Allows a credit acceleration election to provide relief during the COVID-19 outbreak.
- Repeals the Qualified Contract option.
- Increases the annual state volume cap on Private Activity Bonds from $75 per capita to $135 per capita.
- Permanently extends and enhances the NMTC.
- Makes improvements to the Historic Rehabilitation Tax Credit.
- Creates a 25% credit for contributions to a housing reserve fund for providing low-income housing supportive services to building tenants.
- Creates a Neighborhood Homes Credit to encourage rehabilitation of homes in distressed neighborhoods.
- Authorizes funding for affordable housing infrastructure including $70 billion for the Public Housing Capital Fund, $5 billion for the Housing Trust Fund, $5 billion for the HOME program, $2.5 billion for the Capital Magnet Fund, and $10 billion for CDBG.
We, along with our industry partners, have been working closely with Chairman Neal and our House champions to expand and enhance the LIHTC and to garner support to include the improvements in any appropriate legislative vehicle, including the infrastructure package. While the Senate is not expected to embrace the broad House infrastructure package, we are encouraged that House passage of the LIHTC provisions can only strengthen their likelihood for being included in legislation that could be enacted this year – perhaps as part of the next COVID-19 legislation or in a year-end package that extends expiring tax provisions. As for the larger infrastructure package (H.R. 2), the November 3rd election will likely determine the fate of this legislation and all this it entails, including our robust affordable housing agenda.
We will keep you posted on developments, and appreciate your answering the many “calls to action” over these last several months. Your personal efforts have been crucial in providing your elected officials with information regarding affordable housing needs in their States and Districts and presenting them with workable solutions (such as those included in H.R. 2) for how to address those needs. Please let your Members of Congress know of your support for the provisions in H.R. 2. Contact from back home makes a difference, and we thank you for all you are doing.