This week the Senate Finance Committee held a hearing titled, “America’s Affordable Housing Crisis: Challenges and Solutions.” Witnesses from across the housing industry gave testimony before the Committee, including Kathy O’Regan, Director of the NYU Furman Center for Real Estate and Urban Policy; Grant Whitaker, President of the National Council of State Housing Agencies; and Daniel Garcia-Diaz, Director of Financial Markets and Community Investment at the Government Accountability Office.
The hearing focused primarily on the challenge of increasing the supply of affordable housing and strategies to address the significant housing cost burdens faced by many Americans. Senator Hatch opened the hearing, stating that the affordable housing crisis “is a problem that should be ready for a bipartisan solution.”
Professor O’Regan’s testimony outlined the state of the current crisis: housing cost burdens are extremely high and have remained higher than pre-Great Recession levels; affordability is not limited to high cost metropolitan areas but is present across all states and markets; and, that the housing supply is not keeping up with demand. These escalating housing costs can have severe consequences for low-income families and communities, including reduced economic mobility and activity, reduced worker wages, and reduced overall productivity. Senator Cantwell remarked that “doing nothing” can cause also negative ripple-effects across the federal budget, increasing costs in other programs outside of housing.
Senator Hatch and Senator Cantwell have introduced legislation, S.548, the Affordable Housing Credit Improvement Act to help tackle these issues. The bill would increase Low-Income Housing Tax Credit (LIHTC) credit authority by 50 percent, as well as enact several other provisions to strengthen the LIHTC program. CLPHA is strongly supportive of the bill and has worked with Senator Cantwell’s office to promote the improvement and expansion of LIHTC. CLPHA has also engaged in this work as a member of the A.C.T.I.O.N. Campaign Steering Committee. The A.C.T.I.O.N. Campaign has taken a lead role in promoting the expansion of LIHTC, including support of S.548. Last month the Campaign submitted a letter to Senator Hatch urging Congress to expand and strengthen the housing credit, in response to his request for comments on tax reform. Along with other Steering Committee members, CLPHA endorsed and signed the letter.
During the hearing, Committee Members expressed their support for the Cantwell-Hatch bill and there was broad bipartisan consensus that the LIHTC program is a vital tool for increasing the production of affordable housing and providing low-income households, safe, quality, affordable homes. However, there were also concerns raised regarding oversight and compliance of the program. Daniel Garcia-Diaz of the GAO presented testimony that IRS oversight of LIHTC is minimal and that there are no robust controls in place to ensure reasonableness of costs or compliance with program requirements. According to, Mr. Garcia-Diaz, the GAO recommends that HUD, as an agency with a housing mission, play a greater role in the oversight of the program.
Members discussed some potential reforms to improve LIHTC and address some of the concerns that Mr. Garcia-Diaz raised, including deeper income targeting to increase the supply of housing at the lowest income levels and increased compliance monitoring to ensure that tax credit dollars are being used efficiently and appropriately. Members also briefly discussed other tax reform proposals related to housing, such as reforming the Mortgage Interest Deduction, renter/homeowner credits, and first time home buyer tax incentives.