The Affordable Housing Tax Credit Coalition (AHTCC) commends Senator Cantwell and Senate Finance Committee Chairman Hatch for their leadership in introducing the bipartisan Affordable Housing Credit Improvement Act of 2016 (S. 3237), on July 15, 2016, and thanks Senate Finance Committee Ranking Member Wyden for his support as an original co-sponsor.
This legislation builds on the previous Cantwell/Hatch proposal (S. 2962) to expand the Low Income Housing Tax Credit (Housing Credit) by 50 percent to help combat the country’s growing affordable rental housing crisis, and includes comprehensive reforms to the program to enable it to better serve the extremely low income, homeless, rural and Native American communities.
In addition to expanding the number of Credits, this new legislation includes several important program improvements, including:
- Preservation of Affordable Housing – Provides for a purchase option that will allow non-profit and government sponsors to acquire Housing Credit properties when the current 15 year compliance period expires and keep properties affordable for future generations. In addition, the bill modifies the ten year rule, thereby making it less difficult to preserve existing properties.
- Homelessness and Extremely Low Income Families – Provides a new incentive for projects that target homeless or extremely low-income individuals and families. These projects will be eligible to receive a 50 percent Credit boost on the units occupied by such persons, allowing them to remain financially feasible while targeting the neediest populations.
- Energy Efficiency – Modifies the rules by which Housing Credit properties can more easily claim clean energy credits, including the energy efficient new homes credit and the energy efficient commercial building deduction, and the energy investment tax credit.
- Native American Housing – Requires states to consider the needs of Native Americans when allocating Housing Credits and provides additional support to projects located in Native American areas by automatically making them eligible for an additional 30 percent Credit boost if necessary for financial feasibility.
- Rural Project Support – Improves the ability of the Housing Credit to serve rural areas by standardizing tenant income limit rules for projects in rural areas.
- Combat “NIMBYism” – Prohibits local approval and contribution requirements to prevent NIMBY opposition from interfering with Housing Credit developments.
- Basis Boost for Bond Financed Projects – Allows Housing Credit agencies to award a discretionary basis boost to projects financed with tax-exempt bonds when necessary for financial feasibility.
The bill proposes a permanent 4 percent Credit rate floor for acquisition and bond-financed projects, providing more predictability and flexibility in financing these projects. It also contains additional provisions from previous legislation creating a new income-averaging option to help developments maintain financial feasibility while providing a deeper level of affordability.
We look forward to working with Senators Cantwell, Hatch and Wyden in advancing this legislation which recognizes the tremendous need for additional affordable rental housing nationwide – and the effectiveness of the Housing Credit in addressing that need while creating jobs, strengthening the economy and improving lives.