Senator Maria Cantwell (D-Wash.) introduced the Affordable Housing Investment Act of 2008 (S. 2666) on Feb. 25. The bill to modernize the Low Income Housing Tax Credit program is cosponsored by Senators Gordon Smith (R-Ore.), John Kerry (D-Mass.), Norm Coleman (R-Minn.) and Ken Salazar (D-Colo.).
As the nation’s largest affordable rental housing production program, the LIHTC program has produced more than 2 million affordable apartments in two decades – adding another 130,000 homes to the country’s affordable housing inventory every year. The new bill would improve coordination with other federal housing programs, incentivize more private investment in the program, help preserve existing affordable housing and simplify program administration.
Among its myriad proposed improvements, the bill proposes to:
- Exempt LIHTCs from alternative minimum tax (AMT) liability
- Ensure that LIHTC developments can use all forms of rental and operating assistance without penalty
- Expand the allowable basis for community service facilities
- Allow the use of below-market federal loans with 9 percent LIHTCs
- Allow HOME-assisted LIHTC developments to receive a 30 percent basis boost permitted all other credit properties. This change is intended to facilitate development in high-cost areas. (Credit developments in qualified census tracts and difficult development areas are eligible for a 30 percent increase in eligible basis. Credit developments using below-market HOME funding, however, are not eligible for this 30 percent “basis boost” at this time.)
A similar bill is under development by the House Ways and Means Committee and is expected to be introduced later this spring.
Senate Banking Committee Chairman Christopher Dodd (D-Conn.) introduced the Section 8 Voucher Reform Act of 2008 (S. 2684) on March 3. This bill would streamline housing inspections, simplify income determinations and ease the portability process. The legislation would also allow public housing authorities (PHAs) to use a larger share of vouchers for project-based assistance and would authorize project-based preservation vouchers to be used in place of enhanced tenant-based assistance.
The House passed its version of voucher reform legislation (H.R. 1851) last year. Both bills include an allocation formula that distributes funds to PHAs based on their leasing and cost data from the previous year. Like the House bill, the Senate bill would authorize 100,000 new vouchers during a five-year period.
The House Transportation, Housing and Urban Development Appropriations Subcommittee and the Senate THUD Appropriations Subcommittee held oversight hearings on the Administration’s Fiscal Year 2009 HUD budget in February and March respectively. Senate and House Committee members expressed strong opposition to the community development block grant (CDBG) funding cuts as well as other proposed cuts to HUD programs in the Administration’s FY 2009 budget request.
HUD Secretary Alphonso Jackson defended cuts in the CDBG program by calling for updating the distribution formula, which he contended would allow for more efficient distribution of CDBG resources. Jackson also urged passage of FHA modernization legislation and permanently raising the FHA and GSE conforming loan limits.
Meanwhile, the House and Senate have each adopted budget resolutions that include discretionary spending levels higher than the Administration’s $992 billion budget request – $25.5 billion and $21.8 billion more than the request, respectively. The House and Senate will now move to conference negotiations toward a final budget resolution.
The Office of Federal Housing Enterprise Oversight reduced the amount of capital that Fannie Mae and Freddie Mac are required to hold as a reserve against losses. This March 19 decision will allow the two government-sponsored enterprises (GSEs) to immediately increase their investment in mortgages by up to $200 billion combined. Leaders of the two companies say this could improve the availability and affordability of home loans.
Banking Committee Chairman Christopher Dodd (D-Conn.) has indicated there is broad agreement on the need for a strong, single regulator. Both the House and the Senate are considering GSE reform legislation that would strengthen oversight of the two mortgage companies. The Senate Banking, Housing and Urban Affairs Committee held a March 6 hearing on GSE reform, during which it heard support for legislation that would expand affordable housing resources. The House passed the Federal Housing Finance Reform Act (H.R. 1427) in 2007, which would create a new independent regulator for the GSEs among other provisions.
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