The Biden Administration’s Vision for the Road Ahead
On May 28, 2021, the Administration submitted its Fiscal Year 2022 budget that includes an expansion of the Low-Income Housing Tax Credit, a new tax credit to revitalize single family homes in distressed neighborhoods; and a permanent New Markets Tax Credit. These initiatives are described in the Department of the Treasury’s so-called Green Book, a document that provides general explanations and revenue estimates for the Administration’s Fiscal Year 2022 revenue proposals.
LIHTC Expansion: Noting that the volume of housing credit dollar amounts (HCDAs) available under current law is “grossly insufficient” to meet low-income tenants’ needs for affordable housing, the Administration’s budget creates a new Opportunity Housing Credit Dollar Amount (OHCDA) that would have a separate ceiling from existing allocation ceilings of HCDAs.
In each calendar year 2022 through 2026, the aggregate number of new OHCDAs would be 118 percent of the aggregate annual number of new HCDAs under current law, made available to states on a per capita basis, A different per capita amount would be applied to each state (as determined by a formula established by the Treasury Secretary in consultation with HUD) that provides higher amounts to states with higher costs of constructing and operating affordable housing.
Housing credit agencies would be required to allocate the majority of their OHCDAs to projects in Census Tracts of Opportunities (CTOs). Under the proposal, a CTO is defined as a tract that is entirely in one or more difficult development areas (DDAs)
The proposal also provides for a permanent basis boost of up to 50 percent for buildings in DDAs that receive allocations of either HCDAs or OHCDAs. While different then the proposal in the AHCIA which seeks to provide a basis boost for developments in high opportunity areas, both proposals a focused on the production of affordable housing is areas that would provide better opportunities and outcomes for residents.
The Neighborhood Homes Investment Credit: The new credit is intended to revitalize distressed neighborhoods by covering the gap between the cost of building or renovating homes and the price at which they can be sold. It would support new construction for sale, substantial rehabilitation for sale, and substantial rehabilitation for existing homeowners. The Treasury Department would award a total of $2 billion in credit authority to the states in 2022. The amount would be indexed for inflation for the years 2023 to 2031.
New Markets Tax Credit (NMTC): The proposal would permanently extend the NMTC, with a new allocation for each year after 2025. These annual amounts would be $5 billion, indexed for inflation after 2026.
Department of Housing and Urban Development (HUD) Budget Request
The budget request includes $68.7 billion for the Department of Housing and Urban Development (HUD), a 15 percent increase over the Fiscal Year 2021 enacted level. The request includes:
$30.4 billion for the Housing Choice Voucher Program, which accommodates 200,000 new vouchers, prioritizing those fleeing from domestic violence and households experiencing homelessness;
$1.9 billion for HOME Investment Partnerships Program;
$3.8 billion for the Community Development Block Grant Program;
$14.1 billion for Project-Based Rental Assistance;
$3.5 billion to provide housing and services to individuals and families experiencing homelessness, including a focus on survivors of domestic violence and youth experiencing homelessness;
$723 million for the Indian Housing Block Grant Program;
$3.2 billion for Public Housing modernization grants;
$400 million to remove dangerous health hazards from homes, including lead, carbon monoxide, and radon;
$800 million in targeted climate resilience and energy efficiency improvements in public housing and other assisted housing;
$85 million for Fair Housing programs, and increased HUD staff capacity to redress discriminatory housing practices; and
$2 billion for Management and Administration expenses investing in critical staffing and information technology needs to strengthen HUD’s capacity to deliver on its mission.
American Jobs Plan
On May 26, 2021, the Administration released a fact sheet outlining the Administration’s housing and community infrastructure plan to make housing more affordable for working and middle-class families. The initiative, included in the American Jobs Plan, pairs $213 billion in direct funding with $105 billion in new and expanded tax credits to build and modernize housing across the country. The plan includes:
$55 billion for the Low-Income Housing Tax Credit, with a focus on increasing production in high-opportunity areas;
$20 billion for the Neighborhood Homes Investment Act; providing for a tax credit to revitalize single family homes in distressed neighborhoods;
$35 billion for the HOME Investment Partnerships program;
$45 billion for the Housing Trust Fund;
$12 billion for the Capital Magnet Fund;
$2 billion for new project-based Section 8 assistance;
$40 billion for the Public Housing Capital Fund;
$3 billion to fund the inspection and removal of lead-based paint;
$5 billion for a program to encourage the removal of exclusionary zoning and harmful land use policies;
$2 billion to build and rehabilitate rural housing (using the Section 502 and Section 504 programs);
$2 billion for the Section 202 housing for very low-income older Americans;
$2 billion for expanding development and rehabilitation of tribal housing;
$2 billion for a new Community Development Block Grant program for resilience activities in communities vulnerable to climate change;
$17.5 billion for the Department of Energy’s Weatherization Assistance program;
$500 million in grants and low-interest loans to renovate multifamily housing to make it more energy efficient and resilient;
$10 billion for a consumer electrification rebate program;
$250 million for a new Main Street Revitalization Program to provides grants to communities renovating their downtown businesses and adding affordable housing;
$10 billion to support community-led redevelopment projects to provide shared amenities, new economic activity, and services.
Affordable Housing Credit Improvement Act (S. 1136, H.R. 2573)
The White House is engaged in ongoing conversations with Congress on a large infrastructure package that could be a good fit for inclusion of the Affordable Housing Tax Credit Improvement Act. While we are encouraged that there is bipartisan support for S. 1136 and H.R. 2573, we are working hard to add cosponsors to support our champions in their efforts to include the bill in an appropriate legislative vehicle.
To that end, we appreciate all that you are doing to encourage your elected officials to sign onto S. 1136 or H.R. 2573. Before leaving for the Memorial Day recess, our Senate champions added 10 new cosponsors – five Democrats and five Republicans. Our House champions added seventeen new cosponsors – 9 Democrats and 8 Republicans. House Members will be in their respective districts until June 14, so this would be an ideal time for you to touch base with them. If we can help, please let us know.