The infrastructure package and how it relates to affordable housing

We wanted to update you on a significant development in the Senate regarding the bipartisan infrastructure package that addresses traditional “core” infrastructure needs such as transportation, roads and bridges, water, and the power grid. After hitting a number of potholes and speed bumps over the past month, a bipartisan deal was reached on July 28th, followed by a key procedural vote to begin the process for Senate consideration of the infrastructure package. Seventeen Republicans, including Minority Leader Mitch McConnell (R-KY), joined Democrats in approving the procedural measure to allow the Senate to move forward. The vote was 67-32 – seven more votes than were needed to advance the legislation. An earlier attempt on July 21st was blocked by Senate Republicans who argued that they had not seen legislative text or a budget score.

The bipartisan infrastructure measure provides $550 billion in new spending over five years and is offset by a laundry list of “pay-fors,” including, among others, repurposing unused COVID relief funds, extending fees on GSEs, reinstating certain Superfund fees, requiring reporting requirements for cryptocurrency, and extending customs users fees. The offsets do not include an increase in gasoline excise taxes or an increase in IRS funding to help close the tax gap. Those controversial proposals surfaced briefly in earlier negotiations, but drew substantial opposition.

With the breakthrough on a deal and the positive progress on the procedural vote, the Senate is expected to vote on the bill by next week. However, Senate Leadership will first have to negotiate the scope and number of amendments that can be offered on the floor. While final passage is not guaranteed, there is a strong desire by many Senators to go home for the August break with positive action on an infrastructure bill.

Senate passage of the bipartisan infrastructure bill will also help move along a second infrastructure package that likely will include a number of the President’s priorities – including “human” infrastructure measures focusing on affordable housing, child care, and paid family and medical leave, among other provisions. Because Republicans are not expected to support this second bill, Senate Democratic leaders are putting in motion plans to use the budget reconciliation process to advance the measure. Reconciliation is an especially important tool in the Senate because it allows a bill to pass by a simple majority rather than requiring the 60 votes generally needed to advance legislation in the Senate. A budget resolution must first be passed before a reconciliation package can be crafted and voted on. Majority Leader Charles Schumer (D-NY) stated that he expects the Senate to consider the Fiscal Year 2022 budget resolution before the August recess.

We have been working hard to garner support for our affordable housing agenda and are optimistic that significant provisions from the Affordable Housing Credit Improvement Act (AHCIA) may be included in the reconciliation bill. However, we are concerned about the eventual size of the reconciliation package and the possibility that if trimmed back from the current number of $3.5 trillion, there will be pressure to do less in the affordable housing space, especially on the tax side (LIHTC). Voicing support for the AHCIA with the House and Senate leadership, as well as the chairmen of the tax writing committees, is vitally important if we are to see investments in the LIHTC.

We want to also note that some of the AHCIA provisions may not be included because they do not meet certain restrictions that are unique to the reconciliation process. For example, provisions that do not have an impact on spending or revenues (either positive or negative) likely will not be included. The Senate Parliamentarian plays a key role in determining the fate of reconciliation provisions.

In addition to processing the reconciliation bill after the August break, Members will face a number of tough decisions. Congress will need to increase or suspend the debt ceiling to avoid the federal government defaulting on its obligations, and it will need to pass legislation to fund the federal government by September 30, 2021– the end of the fiscal year — in order to prevent a government shutdown.

We expect a busy fall, and will keep you posted on any developments. Thank you for all you are doing to encourage your Members of Congress to support the AHCIA. Let us know if we can assist you as you make contact with your elected officials.