President-elect Donald Trump was silent on affordable housing during the election race, so the question becomes what will he do once he is in the White House.
“With a President-elect Trump and a Republican Congress, I expect comprehensive tax reform to be one of the highest priorities for the new administration, using the House tax reform blueprint released in June as the starting point for negotiations,” says Michael Novogradac, managing partner of Novogradac & Co., an accounting and advisory firm. “Republicans could decide to push for lasting, bipartisan tax reform and work with congressional Democrats, or they could decide to push for partisan tax reform through budget reconciliation, which would facilitate passage in the Senate. In the latter scenario, the low-income housing tax credits (LIHTCs) and New Markets Tax Credits (NMTCs) would be at risk.”
This blueprint released by House Republicans earlier this year omitted mention of LIHTC, the nation’s most important tool for creating and rehabbing affordable housing. That was disappointing considering that the LIHTC program was one of the only tax preferences included in a discussion plan released by former Ways and Means Committee Chairman Dave Camp in 2014.
Although LIHTCs and NMTCs are not specifically mentioned in the Republican proposal, it's worth noting that the plan is critical of special-interest deductions and credits. It says "this Blueprint generally will eliminate special-interest deductions and credits in favor of providing lower tax rates for all businesses and eliminating taxes on business investment."
Trump stunned the world Tuesday, defeating Hillary Clinton to become the nation’s 45th president. During the campaign, Clinton brought up an old Justice Department lawsuit filed against Trump and his company, alleging racial discrimination at their apartment properties.
Clinton’s platform called for protecting the LIHTC and providing additional credits in communities where the demand for these credits far exceeds the supply.
Trump’s support is far less known, but some in the industry remain hopeful that their cause will remain strong.
“There is no doubt that the affordable industry can move forward with increasing the supply of funding for housing regardless of the election results,” says Bob Moss, principal and national director of governmental affairs at CohnReznick. “Perhaps this historic event will galvanize the various voices in our industry into a singular voice to tell our story more effectively. We will continue to have our champions in place in Congress, and we will fight to expand that support.”
In addition to tax reform, the new president will also have to address the future of Fannie Mae and Freddie Mac, which have been in conservatorship since 2008, and the Department of Housing and Urban Development (HUD).
“We don’t know what is on President-elect Trump’s agenda for HUD and affordable housing spending,” says Peter Lawrence, director of public policy and government relations at Novogradac. “However, given Trump’s tax and budget priorities, it is hard to imagine that such spending will increase, and indeed the affordable housing community will need to work very hard to keep what we currently have. In particular, how Trump addresses the debt-ceiling suspension that expires in March will be incredibly influential on discretionary spending in his administration.”
The Republicans will control both the House and Senate. That means Sen. Orrin Hatch (R-Utah) is in line to remain chair of the Senate Finance Committee. Hatch is a co-sponsor of a bill (S. 3237) to expand and improve the LIHTC.
Ron Wyden, the Democratic senator from Oregon, won re-election to his seat. He recently introduced legislation (S. 3384) to create a middle-income housing tax credit.
Key national groups issued statements following the election, including the National Association of Home Builders (NAHB). Ed Brady, NAHB chairman and a home builder and developer from Bloomington, Ill., congratulated Trump on his victory.
“When President-elect Trump takes the oath of office in January and the 115th Congress convenes, NAHB looks forward to working in a bipartisan manner with the incoming administration and Republican and Democratic congressional leaders to tackle critical issues facing the housing industry,” he says.
“Specifically, policymakers need to reform the regulatory process, ensure creditworthy home buyers and small businesses can get mortgages and loans, protect the mortgage interest deduction, and expand the LIHTC. It is also essential to enact comprehensive housing finance reform that safeguards the 30-year mortgage. This pro-housing legislative and regulatory agenda will spur job growth and keep the housing and economic recovery moving forward.”