On August 1, the Senate Finance Committee held a hearing, “America’s Affordable Housing Crisis: Challenges and Solutions.” 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.” To view our write-up of the hearing, click here.
To help tackle the affordable housing issues discussed in the hearing, Senators Orrin G. Hatch (R-UT) and Maria Cantwell (D-WA) have introduced legislation, S. 548, the Affordable Housing Credit Improvement Act. The bill would increase Low-Income Housing Tax Credit (LIHTC) credit authority by 50 percent, as well as enact roughly two dozen changes to strengthen the program by streamlining program rules, improving flexibility, and enabling the program to serve a wider array of local needs.
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, director of financial markets and community investment at the U.S. Government Accountability Office (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.
In our Statement for the Record, CLPHA applauded the leadership the Senate Finance Committee has shown in support of LIHTC to date and encouraged the Committee to support S. 548. The bill is especially beneficial to the public housing program, which has experienced decades of underfunding and federal disinvestment. We noted that LIHTC has proven to be an extremely important preservation tool for public housing, and PHAs have a long history of leveraging private equity through LIHTCs to fill the funding gap created by decreased federal appropriations. Without the LIHTC program, preservation of their public housing stock would not be possible.
CLPHA also acknowledged that competition for more valuable 9% LIHTCs is fierce in many states and that there have been concerns within the affordable housing community about increased demand from the public housing portfolio. Increasing the allocation authority by 50 percent would support the preservation and construction of up to 400,000 additional affordable apartments over a ten-year period, including the renovation of vital public housing units that are currently at-risk. Additionally, the legislation allows for an increased basis boost for projects serving extremely low-income households. This would be particularly beneficial to housing authorities, as 75 percent of public housing residents are extremely-low income.
CLPHA has been strongly supportive of the legislation. In addition to the Statement of Record above, CLPHA has also engaged in this work as a member of the A.C.T.I.O.N. Campaign Steering Committee (A Call to Invest in Our Neighborhoods). 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 in response to his request for comments on tax reform, urging Congress to expand and strengthen the housing credit. Along with other Steering Committee members, CLPHA endorsed and signed the letter.
As Congress takes on tax reform in the upcoming months, we will continue to support this important legislation that would provide needed resources to public housing. CLPHA members should support the Affordable Housing Credit Improvement Act by contacting their senators during recess to urge them to support the bill.