Capitol Express Newsletter: Senate Begins Tax Reform Mark-up, House Advances Tax Reform Bill to Floor
CONGRESSIONAL AND ADMINISTRATION NEWS
Senate Begins Marking Up Tax Bill with Significant Improvements from House Bill
Today the Senate Finance Committee will begin marking up its version of the “Tax Cuts and Jobs Act”, comprehensive tax reform legislation that the White House, House and Senate are hoping to enact into law by the end of the year. The Senate version, released last Thursday, contains notable differences from the House bill released the previous week. The Senate tax reform plan aligns with the House bill on the proposals to retain the Low-Income Housing Tax Credit, but rejects other proposals in the House bill that would severely damage affordable housing and community development programs. Most notably, the Senate bill preserves both the tax-exemption on private activity bonds (PABs) and New Markets Tax Credit (NMTC) allocation authority through 2019, two important and positive deviations from the House bill. However, neither bill makes any adjustments to the Housing Credit to insulate it from the proposed reduction in the corporate tax rate, a change that would lower the price investors are willing to pay for Housing Credits and therefore decrease the amount of equity that can be raised for affordable housing development. Absent any adjustments, the Senate bill would reduce affordable housing production by an estimated 267,000 to 293,000 units over ten years, the vast majority of which would result from the lower corporate tax rate.
Several amendments were filed that would make positive improvements to both the Housing Credit and NMTC. They include an amendment filed by Senate Finance Committee Chairman Orrin Hatch (R-UT) that would enact no-cost provisions from the Cantwell-Hatch Affordable Housing Credit Improvement Act (S. 548), and another filed by Senator Rob Portman (R-OH) that would permanently extend the NMTC. The Senate Finance Committee will be considering these and other amendments throughout the week, so now is a valuable time to contact Republican Senators on the Finance Committee and urge them to support the Housing Credit, Housing Bonds and NMTC as tax reform progresses, and to make adjustments to sustain affordable housing production in light of a lower corporate rate.
“A strong economy requires stable homes and thriving communities, and any pro-growth tax reform plan should support proven tools to provide these necessities – the Housing Credit and the NMTC,” Enterprise President and CEO Terri Ludwig said in a statement. “These programs work together to make well-designed homes affordable, support local economic development and connect residents to opportunity.”
Read an analysis of the Senate tax reform bill on Enterprise’s blog. You can also visit the ACTION Campaign website for more details, specific action items and advocacy tools to support the Housing Credit and Housing Bonds, and the NMTC Coalition website for materials to support the NMTC.
House Advances Tax Reform Bill without Needed Reforms
As the Senate begins marking up its tax reform bill, the House version of the “Tax Cuts and Jobs Act” is advancing to the floor this week after it was passed out of the House Ways and Means Committee last week on a party-line vote. The House version would retain the Housing Credit, which is a major achievement and testament to strong advocacy efforts. However, it would also eliminate the tax exemption on private activity bonds, including multifamily Housing Bonds, which provide critical financing to roughly half of all Housing Credit developments, and eliminate NMTC allocation authority after 2017. Like the Senate bill, the House bill also proposes a lower corporate tax rate without any offsetting adjustments to the Housing Credit. Coupled with the loss of Housing Bonds, the House bill could reduce the future supply of affordable rental housing by nearly one million units, according to Novogradac & Co. And eliminating the NMTC, a successful public-private partnership that attracts private capital to some of the nation’s most distressed communities, will hinder efforts to revitalize communities and promote economic opportunity.
Though the Ways and Means Committee considered amendments to reverse these harmful provisions, none were adopted. However, modifications can still be made before the bill goes to the House floor for a vote this week, and we encourage all stakeholders to reach out to Republican Representatives and urge them to share their support for the Housing Credit, Housing Bonds and NMTC with Chairman Kevin Brady (R-TX) and Speaker Paul Ryan (R-WI). Read an analysis of the House tax reform bill on Enterprise’s blog.
Congress Looks Toward Potential Continuing Resolution for Remainder of 2017
While Congress continues to focus on tax reform, the final fiscal year (FY) 2018 appropriations outlook remains uncertain. The current continuing resolution (CR) funding the government expires December 8, and it is looking increasingly likely that Congress will pass another CR through at least the end of the year. In the meantime, appropriators on both sides of the aisle have expressed interest in a budget deal that would raise the spending caps set by the Budget Control Act, allowing for higher funding levels in the event of a FY 18 omnibus spending package.
New Policy Proposals to Modify the NFIP Released as House Considers Bill to Reauthorize the Program
Last week, the Rockefeller Foundation's 100 Resilient Cities initiative released a series of policy proposals for expanding the National Flood Insurance Program (NFIP), developed in partnership with Enterprise Community Partners and the Georgetown Climate Center. The NFIP faces $24 billion in debt and serious program shortfalls, including outdated floodplain maps and rising insurance rates. Among the policy proposals offered by the 100 Resilient Cities initiative include providing accurate risk-based price signals, funding and incentivizing community flood mitigation programs and maintaining up-to-date flood risk and future conditions data. The 100 Resilient Cities initiative urges mayors and local leaders to use the recommendations to advocate for an improved NFIP that enhances flood resilience and reduces the economic costs of flooding to taxpayers. The House Rules Committee will hold a hearing on the National Flood Insurance Program reauthorization bill (H.R. 2874) today to consider reauthorizing the program, which is set to expire in December.
Senate Hearing Touches on Importance of the Housing Credit and NMTC for Native American Communities
During a recent Senate Indian Affairs Committee Hearing on “Building tribal Economies: Modernizing Tax Policies that work for Indian Country,” Senators from both sides of the aisle expressed support for provisions of the Affordable Housing Credit Improvement Act (S. 548) that would facilitate the development of affordable housing in Native American communities. The Affordable Housing Credit Improvement Act, sponsored by Senator Maria Cantwell (D-WA) and Senate Finance Committee Orrin Hatch (R-UT), contains several provisions to strengthen and streamline the Housing Credit’s ability to finance affordable housing on Indian lands, including automatically qualifying developments on Indian lands as eligible for up to 30 percent additional Housing Credit equity and specifying Native American housing as a selection criteria in all state applications. See the ACTION Campaign fact sheet on the Housing Credit’s impact on Native American communities for more information. Chairman John Hoeven (R-ND), Senator Lisa Murkowski (R-AK) and Senator Heidi Heitkamp (D-ND) also recently introduced a bill, known as the Tribal Economic Assistance Act (S. 2012; The TEA Act), which would require a new priority under the NMTC for qualified low-income community investments on Indian reservations.
RESEARCH AND REPORTS
New Report Highlights Rising Need for Federal Housing Assistance
A new brief released by the Urban Institute, “Trends in Housing Problems and Federal Housing Assistance,” shows that low-income renter needs are far outpacing the amount of federal housing assistance that is available to these households. The number of low-income households with housing needs increased 24 percent between 2005 and 2015 and now accounts for over half of all renters. However, at the same time, the number of households receiving federal rental assistance -- including public housing, privately-owned subsidized housing (such as the Housing Credit) and housing vouchers -- declined sharply, from 24 percent in 2005 to 16 percent in 2015. These findings indicate that the housing assistance gap will continue to worsen as the need continues to expand and funding for federal housing assistance remains stagnant. The Housing Credit has been the fastest growing U.S. housing program over the past 20 years, and allows subsidy resources to spread among more households than would otherwise be possible. This report highlights the critical need to not only preserve and sustain the Housing Credit in tax reform, but to also expand Housing Credit resources as a first step in addressing the vast affordable rental housing needs nationwide.
New Report Highlights the Successes of the RAD Program
A new report by the Terner Center for Housing Innovation at UC Berkeley highlights the early successes of the federal Rental Assistance Demonstration (RAD) program, which converts public housing authorities’ (PHAs) existing annual operating and capital subsidies into project-based rental contracts that can attract private capital, a change that offers significant tenant and affordability protections. The report shows that the RAD program is successfully leveraging federal dollars with private funds to help PHAs rehabilitate and preserve public housing units that would otherwise be demolished over time due to obsolescence. Furthermore, the report emphasizes the importance of expanding the RAD program by allocating additional federal funds and using other financing sources to help close financing gaps, including considering expansions to the Housing Credit and set-asides for RAD as part of housing finance reform.
STATE AND LOCAL POLICY
Broad Array of Stakeholders Call on House to Restore Private Activity Bonds in Tax Reform
In an op-ed in the Washington Examiner, Representatives Randy Hultgren (R-Ill.) and Dutch Ruppersberger (D- Md.) encourage their colleagues in Congress to preserve the tax exemption on private activity bonds (PABs) in tax reform. Housing officials from across the country have called on Congress to preserve PABs, citing the devastating impact the elimination of Housing Bonds (one type of PAB) have on affordable housing. According to Eric Enderlin of New York City’s Housing Development Corporation, “The proposal to eliminate private activity bonds would mean the loss of funding to build thousands of affordable homes for low and middle income New Yorkers. We are confident our partners across the country, and across partisan lines, will fight tooth and nail to protect this critical resource.” Housing officials in California have expressed similar concerns. Hospitals and universities are also taking note, since PABs are also a critical mechanism for infrastructure activity -- including building hospitals and university facilities -- across the nation. In Illinois and Pennsylvania, the health and academia sectors are joining the fight to restore PABs.
State and Local Election Results Include Big Wins for Affordable Housing
Last week, voters across the country expressed overwhelming support for affordable housing. Voters in King County, Washington, approved another funding measure that would provide services for vulnerable populations such as the homeless, seniors and veterans, in the amount of $354 million over six years. In Charleston, S.C., voters approved a ballot measure that would provide $20 million in bond funding for affordable housing development, which is expected to create 800 new affordable units. And voters in the city of Ellensburg, Wash., approved an affordable housing tax. Read more about the uptick of affordable housing as a key topic of debate in elections across the nation, including Boulder, New York, and Raleigh, and how it could shape the mayoral debate in Atlanta.
IN CASE YOU MISSED IT
In recent Community Developments, we highlighted housing challenges in rural communities, the homelessness crisis on the West Coast, how wealth inequality has changed in the U.S. since the Great Recession, and much more. Sign up here to receive Community Developments.
HEARINGS AND EVENTS
Congressional Hearing Update
- November 13: Open Executive Session to Consider an Original Bill Entitled the Tax Cuts and Jobs Act, Senate Finance Committee
- November 13: Hearing to Consider the 21st Century Flood Reform Act, House Committee on Rules
- November 14: Markup to Consider a Series of Bills Including “Securing Access to Affordable Mortgages,” House Financial Services Committee
- November 13: Housing, health and energy: How they fit together and their federal budget outlook, National Housing Conference (webinar)
- November 14-16: AHF Live, The Affordable Housing Developers Summit (Chicago)
- November 15: Housing America’s Families Forum, J. Ronald Terwilliger Foundation for Housing America’s Families, Bipartisan Policy Center (Detroit)
- November 15: Promoting Economic Opportunity: Models That Work, Urban Institute (Washington, D.C.)
- November 16: Reaching for the Moon: Can America Deliver 5 Million Additional Apprenticeships?, Urban Institute (Washington, D.C.)
- November 16: FY18 Budget Outlook for Affordable Housing Programs, Campaign for Housing and Community Development Funding (webinar)
- November 18-September 16, 2018: Making Room: Housing for a Changing America, National Building Museum (Washington, D.C.)
- November 20- December 1: Novogradac 2017 Tax Credit Housing Finance Conference, Novogradac & Co LLP (Las Vegas)
- November 29: Solutions for Affordable Housing, National Housing Conference (Washington, D.C.)
- November 30: Novogradac 2017 Tax Credit Housing Finance Conference, Novogradac & Co. (Las Vegas)
- December 1: NAAHL Policy and Practice Conference, National Association of Affordable Housing Lenders (Washington, D.C.)
- December 4-6: Homes Within Reach Conference, Housing Alliance of Pennsylvania (Harrisburg, Pa.)
- December 5: Affordable Housing Solutions for Rural Veterans: A Symposium, Housing Assistance Council (Washington, D.C.)
- December 6: NYHC/NHC 44th Annual Awards, New York Housing Conference/National Housing Conference (New York)
- January 7-10: PHADA Commissioners’ Conference, Public Housing Authorities Directors Association (San Diego)
- January 7-12: The HFA Institute, National Council of State Housing Agencies (Washington, D.C.)
- January 10-12: Beyond Housing 2018: A National Conversation on Child Homelessness and Poverty, The Institute for Children, Poverty, and Homelessness (New York)
- January 11: Novogradac 2018 Tax Credit Developers Conference, Novogradac & Co. (Miami Beach, Fla.)
- January 23: Novogradac 2018 New Markets Tax Credit Conference, Novogradac & Co. (San Diego)