Tax Reform

A new bill from House Ways and Means Committee Chairman Kevin Brady (R-TX) that includes an array of tax provisions could put Housing Credit legislation back in play during the lame duck session of Congress. The “Retirement, Savings, and Other Tax Relief Act of 2018,” would renew some expired tax provisions, make technical corrections to the recent tax cut legislation, provide incentives for retirement savings, provide tax relief for disaster victims and make improvements to the IRS.

Sections 502 and 503 of the bill clarify the tax exemption for veterans from the Housing Credit general public use rule and aligns the multifamily Housing Bond program’s general public use requirement with the Housing Credit’s general public use requirement.

According to the ACTION Campaign, where CLPHA is a Steering Committee member, this is important because, "IRS officials have recently communicated with some bond counsel that the Housing Credit’s general public use rules do not pertain to the Bond program, thus causing problems for 4 percent Credit deals that provide preferences for veterans."

Since Republicans want to move the package before the lame duck session expires, the package is expected to bypass the committee process, and it is likely to receive a vote on the House floor later this week.

But, the Republican proposal is widely seen as an opening bid with room for negotiation from House Democrats to insert their own provisions, such as the Housing Credit, in order to get the bill over the finish line. Still, some Democratic Senators have already indicated they would prefer to wait until the start of the new 116^th Congress before considering any changes to tax legislation.

As negotiations continue, CLPHA will work closely with ACTION, congressional champions, our members and others to advance the housing tax credit agenda.

Contact CLPHA Legislative Director Gerard Holder with questions at gholder@clpha.org

Congress is due to return to Washington, D.C., on November 13, one week after the 2018 mid-term elections. In addition to Senate consideration of judicial and administration nominees, and the expected finalizing of FY2019 funding for departments and agencies currently operating under a continuing resolution, a strong possibility exists that Congress will consider tax extension legislation. This presents a new window of opportunity for CLPHA members to advocate for two tax credit provisions that are very important to the preservation and development of public and affordable housing: the Affordable Housing Credit Improvement Act and the New Markets Tax Credit Extension Act.  

Tax Extenders

According to the ACTION Campaign—CLPHA is a member of its Steering Committee—House Ways and Means Committee Chairman Kevin Brady (R-TX) has indicated that House tax leaders are speaking with their Senate counterparts about tax extenders legislation that Congress could consider during the lame duck session. This is significant since Senate leadership had earlier revealed interest in taking up tax extenders this year, while House leadership was previously unclear.

The ACTION Campaign asserts, “Should tax extenders advance as part of larger tax legislation this fall, which may also include technical provisions and other tax provisions, it may present an opportunity to advance provisions from the Affordable Housing Credit Improvement Act (S. 548/H.R. 1661). To position the Housing Credit as strongly as possible going into any potential negotiations in the lame duck session, ACTION encourages all stakeholders to continue conducting outreach to your elected officials to both urge them to sign on if they haven't already, and thank current co-sponsors for their continued support.” The ACTION Campaign also developed a website with advocacy materials for meeting with elected officials, including state and district level fact sheets along with other materials. 

New Markets Tax Credit

In addition to the Housing Credit legislation, Reps. Steve Stivers (R-OH) and José Serrano (D-NY) are asking colleagues to join them on a Dear Colleague letter urging Ways and Means Chairman Kevin Brady (R-TX) to include a permanent extension of the New Markets Tax Credit Program in any tax legislation considered during the lame duck session. H.R. 1098, the New Markets Tax Credit Extension Act, which would prevent the expiration of a tax credit that draws investment to low-income communities, has already garnered 102 bi-partisan co-sponsors. The deadline for House members to sign onto the letter is November 9.

ACTION:

1. CLPHA strongly encourages members to contact your Senators and Representatives and urge them to sign-on to H.R. 1661 in the House and S.548 in the Senate, if they have not already added their name to the list of co-sponsors. Here is a list of current House and Senate co-sponsors.
2. When asking your Members of Congress to co-sponsor H.R. 1661 or S. 548, also ask them to support adding provisions from the legislation to any tax extender legislation during the lame duck session.
3. Ask your House members to sign onto the Dear Colleague letter urging H.R. 1098 be included in any tax legislation during the lame duck session.

The proposed elimination of the tax exemption for private activity bonds (PABs) in the House tax reform bill, along with elimination of the Historic Tax Credit and the New Markets Tax Credit, will be devastating to the production and preservation of affordable housing (see CLPHA Report 11/13/17). Housing bonds are responsible for approximately half of Low Income Housing Tax Credit (housing credit) production annually. Together, the housing credit and housing bonds finance approximately 50,000 affordable housing units each year.

While Congress is home for recess, it is critical that Members hear from you about the impacts PAB elimination will have on affordable housing.

We urge you to reach out to your Congressional representatives with the following messages:

• Preserve the tax exemption of Private Activity Bonds to support the production and preservation of affordable housing
• Make changes to the Low-Income Housing Tax Credit to strengthen the program and offset the impact of a lower corporate rate on the value of the tax credit by including S. 548, the Affordable Housing Credit Improvement Act, in the tax reform bill
• Maintain the Historic Tax Credit and the New Markets Tax Credit

CLPHA and stakeholders such as the ACTION Campaign (CLPHA sits on the Steering Committee) have continued to educate and press Congress to preserve these important housing production instruments. CLPHA has sent letters to the Senate Finance Committee and the House Ways and Means Committee, the respective tax-writing committees in Congress, whose chairmen and ranking members will probably serve as floor managers for their respective bills and conference committee leaders for any eventual, final legislation.

Additionally, we encourage you to engage with your local media and news outlets to spread the message that the tax reform bill negatively impacts affordable housing. The Seattle Times recently published an op-ed from CLPHA Board Members Stephen Norman (King County Housing Authority) and Andrew Lofton (Seattle Housing Authority) about the elimination of private activity bonds. You can read the full op-ed here.