Sens. Maria Cantwell (D-Wash.) and Orrin Hatch (R-Utah) have introduced legislation to make key changes to the low-income housing tax credit (LIHTC) program.
The new legislation, S. 3237, builds on their earlier proposal to expand the LIHTC program by 50% to help create or preserve approximately 1.3 million affordable homes over a 10-year period—an increase of 400,000 more units than is possible under the current program. The first bill, S. 2962, was introduced in May.
“The housing credit leverages private equity investment to create 100,000 jobs in our communities each year,” Cantwell said in a statement. “Sen. Hatch and I want to expand this proven economic development tool and job creation engine to provide even more affordable housing that America desperately needs.”
It’s significant that Hatch is a co-sponsor, observed several affordable housing leaders. He chairs the powerful Senate Finance Committee, which will have jurisdiction over the bill.
The bill is also co-sponsored by Sen. Ron Wyden (D-Ore.), ranking member of the committee. Cantwell also serves on the committee.
“With this legislation, we can help lift local communities across the country and ensure more individuals and families with limited means have better access to affordable housing,” Hatch said. “I applaud Sen. Cantwell for her leadership on this issue.”
Both the new legislation and the earlier bill appear to have the title Affordable Housing Credit Improvement Act of 2016.
In addition to greatly expanding the number of credits, this new legislation includes several important program changes, including:
· Preservation of Affordable Housing—Provides for a purchase option that will allow nonprofit and government sponsors to acquire housing credit properties when the current 15-year compliance period expires and keep properties affordable for future generations;
· 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% credit boost, allowing them to remain financially feasible while targeting the neediest populations;
· Energy Efficiency—Allows LIHTC properties to claim clean energy credits that were previously unavailable to them, 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 Indian areas by automatically making them eligible for an additional 30% credit boost if necessary for financial feasibility; and
· 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.
The bill 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. The bill also enacts a permanent 4% credit rate floor for acquisition and bond-financed projects, providing more predictability and flexibility in financing these projects.