Affordable housing leaders continue to seek fixed minimum rates for the low-income housing tax credit (LIHTC) program.
Reps. Pat Tiberi (R-Ohio) and Richard Neal (D-Mass) introduced legislation to permanently establish fixed 9% (for new rental construction property) and 4% (for existing property) rates at the end of February. H.R. 1142 would apply to buildings placed in service after Dec. 31, 2014.
The bill has 38 co-sponsors. It recently lost a supporter with the resignation of Aaron Schock, one of H.R. 1142’s original co-sponsors. The Illinois Republican departed Congress after mounting questions about his use of taxpayer dollars.
Maria Cantwell (D-Wash.) and Pat Roberts (R-Kan.) plan to introduce companion legislation in the Senate, said David Gasson, vice president at Boston Capital and executive director of the Housing Advisory Group.
Gasson spoke Tuesday on a legislative issues panel at the CohnReznick Annual Spring Affordable Housing Conference in San Francisco. The session also featured Ali Solis, senior vice president and public policy executive at Enterprise Community Partners, and moderator Bob Moss, principal and national director of governmental affairs at CohnRezick.
In order for the LIHTC bill to pass, it needs to find a “tax vehicle” to attach to, explained Gasson.
At this time, the best chance may come when Congress addresses the Highway Trust Fund this spring. Conversations have already begun about whether other tax provisions can be part of the Highway Trust Fund debate.
“We’re always trying to find a tax vehicle to include the permanent 9% and 4% fix,” Gasson said.
Tax reform watch
In recent years, the affordable housing industry has had to focus much of its efforts on educating lawmakers about the housing credit and defending the program against potential threats posed by tax reform.
Now, some of that attention is being directed to updating the LIHTC, which Moss pointed out is nearing its 30th year.
“We really are moving toward a more proactive agenda,” Solis said. “As part of that discussion, we’re also thinking about what improvements can be made to continue to make this a more efficient and effective program.”
The White House 2016 budget proposal continues to offer several ideas, including allowing more income mixing at LIHTC developments. The idea is to create an income-averaging option to determine a project’s compliance with income-eligibility guidelines and provide a little more flexibility in serving residents.
Another idea is to allow states to convert some of their unused bond cap to LIHTC allocations.
Gasson and Solis both agreed that comprehensive tax reform is highly unlikely in the next two years. However, there is action on this front.
Senate Finance Committee chairman Orrin Hatch (R-Utah) and ranking member Ron Wyden (D-Ore.) have established five working groups to look at tax reform. The LIHTC falls under the community development and infrastructure group, reported Gasson.
Each group will work directly with the nonpartisan Joint Committee on Taxation to produce an in-depth analysis of options and potential legislative solutions within its assigned area. The goal is to have one final report with recommendations from each of the five categories completed by the end of May.
Conference keynote speaker Rick Lazio, former Congressman from New York, called for a change in federal housing policy. He showed how more than 70% of federal housing spending in taxes and other support is going to homeowners while less than 30% goes to renters.
“Can we do a better job of rebalancing the money we have?” asked Lazio, partner and head of the housing finance practice group at the Jones Walker law firm.
He said “we need to fundamentally rethink, rebalance housing policy” to meet the growing demand for affordable housing.