Tax reform passage does not decimate affordable housing creation.
Tax reform has now been passed by Congress and signed into law by the president. The Network has been focused primarily on the restoration of tax-exempt, private activity housing bonds (PABs), which were eliminated in the original House proposal. While the final bill will present challenges for supportive housing and its residents, we are happy to say that PABs were restored in the final version of the bill. This is important as PABs play a vital role in affordable housing development in conjunction with 4% as-of-right Low Income Housing Tax Credits (Housing Credits). This capital funding source has become increasingly important to supportive housing development over the past decade, and will be even more crucial to meet New York State’s supportive housing production goal of 1,200 units per year and New York City’s supportive housing production goal of 500 units per year.
For the past two months the Network has been active in gaining commitments from the majority party members to protect PABs and six of nine weighed in to support our cause: Reps. Donovan, Faso, Katko, King, Stefanik, and Zeldin. We thank them for their support.
The 9% Housing Credit is preserved and no additional amendments were added in the final bill. The 130% basis boost remains the same. However, by lowering the corporate tax rate from 35% to 21%, the bill is anticipated to have a negative effect on the value of the Housing Credit – decreasing it by approximately 14% – and projects will require additional capital funding to be made whole. Actions to ameliorate this impact were not included in the final bill, but the Network will be focusing on legislation to address the issue moving forward.
Finally, both Historic Tax Credits and New Markets Tax Credits were retained.
With tax reform behind us, we will focus our advocacy efforts on the budget, fighting to ensure that critical programs to provide affordable housing and end homelessness are not sacrificed. We anticipate that tax reform’s $1.4 trillion in budget shortfalls will trigger automatic spending cuts equal to $146 billion each year for ten years. If automatic cuts do in fact go into effect, there would be reductions across a range of programs including the Department of Housing and Urban Development (HUD) according to the Times.
Here is the full conference bill: http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf
Relevant news and analysis on the impact on affordable housing can be found on the ACTION Campaign’s website: http://rentalhousingaction.org/.