We urge Congress to enact the Affordable Housing Credit Improvement Act (AHCIA), comprehensive, bipartisan legislation to expand and strengthen the Housing Credit. We applaud Congress for having already enacted three key provisions from the AHCIA: a minimum 4 percent Housing Credit rate, enacted in 2020, and the ‘income averaging’ flexibility and a 12.5 percent increase in the annual Housing Credit allocation for four years, enacted in 2018. In 2021 we will advocate for a 50 percent Housing Credit allocation increase in addition to extending the temporary 12.5 percent allocation, as well as the other components of the AHCIA.
We support proposals to expand access to Private Activity Bonds (PABs) to increase the development and preservation of affordable housing. Roughly half of all Housing Credit developments rely on PAB financing, and as affordable housing needs increase around the country, a growing number of states are bond cap-constrained. With the enactment of the minimum 4 percent Housing Credit rate, the demand for PAB cap will accelerate. Solutions like expanding the PAB cap, lowering bond financing thresholds and improving bond recycling policies would help states keep up with the need for PABs and provide more affordable housing. Working with the Biden Administration and our champions in Congress, we will urge this PAB expansion to be part of any emerging infrastructure package in 2021 and beyond.
We urge the Biden Administration to ensure that the Community Reinvestment Act (CRA) continues to strongly incentivize Housing Credit investment. CRA motivates the vast majority of Housing Credit investment – an estimated 73 percent – meaning any changes to CRA could have significant effects on our ability to build and preserve affordable housing. We urge the reversal of the Office of the Comptroller of the Currency’s CRA rule issued in May 2020 and encourage the three regulators – the Office of the Comptroller of the Currency, Federal Reserve Board, and Federal Deposit Insurance Corporation – to develop a single rule that enhances investment in the Housing Credit.
We encourage the Internal Revenue Service to continue to provide Housing Credit regulatory flexibilities that improve our ability to finance, develop and operate affordable housing. In addition to flexibilities that may be needed to address barriers and challenges brought on by the COVID-19 crisis, we encourage the IRS to modify its proposed Average Income Test regulations, provide a solution to issues that have arisen around Forms 8609, and other issues that may arise.
Support additional emergency affordable housing resources, such as rental assistance and Housing Credit allocations, as part of our nation’s response to the COVID-19 pandemic and other disasters.