On June 25, 2020, Senators Ron Wyden (D-OR) and Maria Cantwell (D-WA) introduced S. 4078, the Emergency Affordable Housing Act of 2020. Senators Ben Cardin (D-MD) and Michael Bennet (D-CO) joined as original cosponsors. The housing credit provisions in S. 4078 are nearly identical to the provisions included in H.R. 2, the Moving Forward Act. H.R. 2, the broad-based infrastructure package unveiled on June 22, is expected to be voted on by the House on July 2. Read the bill summary here.
It is unlikely that the Senate will consider a broad infrastructure package along the lines of H.R. 2, but we are encouraged that House passage of H.R. 2 and introduction S. 4078 could help position our agenda for inclusion in the next COVID-19 legislation or in another appropriate vehicle.
4078 and H.R. 2 include a number of provisions from the Affordable Housing Credit Improvement Act (S. 1703/H.R. 3077), including the following:
- Establishes a permanent 4% credit rate, effective for properties placed in service after January 20, 2020. (S. 4078 modifies the effective date from that in H.R. 2, a change recommended and supported by the industry.).
- 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 a 30% basis boost for rural areas and Native American areas.
- Provides 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, S. 4078 and H.R. 2 include the following provisions:
- 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. (Senator Wyden introduced this measure as a free-standing bill (S. 1956) in 2019.)
- 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 Investment Tax Credit to encourage rehabilitation of homes in distressed neighborhoods. (This proposal was introduced as stand-alone legislation (S. 4073/H.R. 3316 by Senator Ben Cardin (D-MD) and Rep. Brian Higgins (D-NY).
As is usually the case before a congressional recess, there are many moving pieces and the pace is hectic. We faced a potential challenge late last week that could have significantly jeopardized affordable housing production. Thanks to the amazing grassroots efforts of our industry, directly reaching out to key House members as well as the foresight of Speaker Pelosi and Chairman Neal, we were able to prevent legislative language adverse to the LIHTC from being included in HR. 2. As this demonstrates, we are working closely with our congressional champions and industry partners with respect to our agenda, and, as always, we appreciate your ongoing enthusiasm and good work back home. We will keep you posted on any developments.