As Congress leaves for its July 4th recess, we wanted to update you on two very positive developments of critical importance to our industry.
On July 1st, by a vote of 233-188, the House passed a $1.5 trillion broad-based infrastructure bill that includes a number of provisions enhancing and expanding the LIHTC. H.R. 2, the Moving Forward Act, also includes robust funding for key affordable housing programs. H.R. 2 provides:
- A permanent 4% credit rate, effective for properties placed in service after January 20, 2020.
- An increase in 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.
- A 30% basis boost for rural areas and Native American areas.
- 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.
- A reduction of the bond financing threshold for 4% credit developments from 50% to 25%.
- A credit acceleration election to provide relief during the COVID-19 outbreak.
- An increase in the annual state volume cap on Private Activity Bonds from $75 per capita to $135 per capita.
- 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.
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 could help position our agenda for inclusion in the next COVID-19 legislation or in another appropriate vehicle.
On the regulatory front, on July 1st, the Internal Revenue Service issued Notice 2020-53, providing regulatory relief to address the negative impact of COVID-19 on the development, construction and operation of affordable housing properties. The Notice, which is effective immediately, accommodates most of the relief requested by the industry. Among other provisions, it extends deadlines for the ten-percent test; minimum rehabilitation expenditures; the reasonable restoration period in the event of casualty loss; and the tax-exempt bond rehabilitation expenditure period. It also allows medical personnel and other essential workers providing services during the pandemic to temporarily reside in LIHTC units. Read the press release here.
Given the enormous pressure the IRS is operating under to provide relief for myriad problems related to COVID-19, we are especially grateful to our congressional champions for their support and assistance in making this a priority for the Administration. Senators Maria Cantwell (D-WA), Ron Wyden (D-OR), Michael Bennet (D-CO), and Todd Young (R-IN), and Representatives Richard Neal (D-MA), Suzan DelBene (D-WA), and Jackie Walorski (R-IN) were instrumental in this effort.
When Congress returns from its July break, we expect the run-up to the August political conventions to be very busy. The Senate is expected to consider its next COVID-19 package in response to the HEROES Act passed by the House in May. We will continue to push hard for inclusion of our affordable housing priorities in the Senate bill, and will keep you posted on any developments. In the meantime, we wish you and your families a very happy and healthy holiday.