The Senate Finance Committee approved a set of key tax provisions, including extending the 9 percent credit floor for low-income housing tax credits (LIHTC) and establishing a 4 percent credit floor for the acquisition of affordable housing that is not federally subsidized.

The action came in early April, setting up the possibility that the full Senate would take up the tax extenders legislation in May. Under the proposal, the minimum credit rates would be for allocations made before Jan. 1, 2016.

Making it through the Senate Finance Committee was a big first step, but the extenders bill still has a long way to go—perhaps into the lame-duck session, says Bob Moss, principal and national director of governmental affairs at CohnReznick.

Moss calls the extenders action a possible bridge toward broader tax reform.

Affordable housing leaders credit Sen. Maria Cantwell (D-Wash.) for championing the inclusion of the 4 percent credit in the bill.

“It was the first time that the 4 percent rate was included in a tax extenders package,” says Diane Yentel, vice president of public policy and government affairs at Enterprise Community Partners.

The Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act also extends for two years a provision that allows active military members to exclude their basic housing allowance from their annual income when calculating income to qualify for LIHTC units in certain areas. It also extends the New Markets Tax Credit for two years.

The Senate Finance Committee action was significant in a number of ways for the affordable housing industry, says David Gasson, executive director of the Housing Advisory Group and vice president of Boston Capital.

“It demonstrated the support the LIHTC has in the committee but more significantly of the new chairman, Sen. Ron Wyden (D-Ore.), and the ranking member, Sen. Orrin Hatch (R-Utah),” he says.

Another point of significance is Wyden signaled the package is his first statement on tax reform, according to Gasson.

In the House of Representatives, Rep. Dave Camp (R-Mich.) is taking a different approach. He is holding hearings to determine which extenders should be made permanent and which should be left to expire, a process that could take several months.

Disaster-area legislation

A group of legislators has introduced the National Disaster Tax Relief Act of 2014, which would increase LIHTCs in states that had federally declared disasters in 2012 or 2013.

States would receive the greater of $8 multiplied by the population of the qualifying disaster areas or 50 percent of the state housing credit ceiling. The bill also seeks an increase in NMTCs and historic credits in the affected areas.

The groundwork for the legislation was laid after Hurricane Sandy, but the scope of the bill has been broadened to include areas that have since been hit by disasters, including Colorado.

"Through the catastrophic wildfires and devastating floods over the last few years, we have been resilient and are rebuilding better than before," says Sen. Michael Bennet (D-Colo.), a bill co-sponsor. "This bill will help boost those recovery efforts by providing crucial tax relief to families and communities who are continuing to recover."

Enterprise estimates that about 20 states could receive increased allocations, according to Yentel.

Introduced by Sen. Charles Schumer (D-N.Y.), S. 2233 has been referred to the Finance Committee.

Connect with Donna Kimura, deputy editor of Affordable Housing Finance, on Twitter @DKimura_AHF