The affordable housing industry will be watching Congress closely after the Thanksgiving recess regarding the fixed 9% rate for the low-income housing tax credit (LIHTC).
Panelists presenting the Capitol Hill Update session at AHF Live: The Affordable Housing Developers Summit last week in Chicago said they are hopeful Congress will move on the list of temporary extenders after the recess. They hope it will result in at least a two-year extension of the 9% fixed rate for the LIHTC.
“I personally am still confident that we will get at a minimum a permanent 9% fix for 2015 and 2016 allocations as well,” said David Gasson, executive director of the Housing Advisory Group and vice president at Boston Capital. “The 4% rate for acquisitions, the House has never voted on it and the Senate Finance Committee has passed it twice. I don’t know if it will be included. We’ll have to wait and see.”
Congress is looking at a package of extenders to move into the Highway Trust Fund bill, said Bob Moss, principal and national director of governmental affairs at CohnReznick, but it’s still unknown what will be made permanent and what will be two- or three-year temporary extenders.
“There’s a very outside shot that we could get the permanent 9% fixed bill included as one of the permanent extenders they are discussing right now. It doesn’t cost a lot compared with everything else,” said Gasson. “The question is for Republicans whether they can use that to get with the Democrats since they like it as well. It’s something to sweeten the package to get something else.”
If the extenders package is not included with the Highway Trust Fund, it is possible it would be attached to the budget when it goes to vote around Dec. 11.
Looking ahead to 2016, affordable housing leaders are preparing for tax reform and a proactive approach to expand the LIHTC program.
Senior lawmakers Sens. Orrin Hatch (R-Utah) and Ron Wyden (D-Ore.) and Reps. Kevin Brady (R-Texas) and Sander Levin (D-Mich.), known as the Big Four, are working on tax reform, and with Speaker Paul Ryan, it is pretty much guaranteed there will be an effort for tax reform in 2017, said Moss.
“What we’re going to see next year is Paul Ryan is going to get the House ready for tax reform and for the next president. They’ll have a package ready. It’ll be a marker for what they want in tax reform. It may contain a lot of [former House Ways and Means Chairman Dave] Camp’s provisions so thank goodness we were recognized as a tax credit that was worth saving because they may use that platform to start to create the marker for next year,” said Moss. “But they are going to be ready for a new president regardless of the party because virtually everyone sees the need for tax reform. I think we’re headed toward that point.“
With a timeline of tax reform after the presidential election, 2016 is shaping up to be a critical year for the industry to continue its advocacy efforts for the LIHTC program as well as the other programs working in tandem with the tax credit.
“Next year is going to be a critically important year for us to really continue the education process that we are doing, but really ramp it up, ” said Ali Solis, senior vice president of public policy for Enterprise Community Partners. “We’ve got to be in the game. Too often as an industry we take our foot off the accelerator because we are in the Camp bill and feel we’re in a pretty good position. While we’re excited that we were in there, there are certainly improvements needed to the Camp provisions, so we’ve got a lot of work to do, but the good news is we have a little time to get out there with the right message.”
Moss agreed, saying the industry has time to have a banner year for getting members of Congress out to their grand openings. “It has a 100% success rate,” he said. “We’ve never had a member of Congress visit a tax credit project and say this program is useless.”
Affordable housing leaders involved in the ACTION campaign, a coalition of over 1,000 national, state, and local organizations, also want to move toward a more aggressive approach toward expanding the LIHTC program.
“What we are trying to do as an industry is get more resources for this program,” Solis said. “We are advocates for this program, and we are advocates for the people that it serves. If we can continue to articulate the need for an expansion of this credit, that should be our priority. We should be advocating when we have tax reform, and we’ve got an opportunity at the table to think about a significant expansion.”
There are provisions around the bond conversion proposal that the administration has put forward. It would take unused 4% bond cap and convert it into 9% credits for the creation and preservation of affordable housing as well as other proposals, like income-averaging.
“We are hoping next year we’ll be in a position to have legislation introduced that expands the credit,” said Solis.