Capitol Express Newsletter: Tax Reform Framework Retains the Housing Credit, Congress to Vote on FY 2018 Budget
CONGRESSIONAL AND ADMINISTRATION NEWS
Tax Reform Framework Proposes to Retain the Housing Credit
Last week, leadership of the Trump Administration, House Ways and Means Committee and Senate Finance Committee issued a "Unified Framework for Fixing Our Broken Tax Code," which proposes to lower the corporate tax rate to 20 percent and eliminate "numerous" corporate tax expenditures. The Low-Income Housing Tax Credit (Housing Credit) is one of only two corporate tax expenditures the framework explicitly proposes to retain, noting that it is a tax incentive that has “proven to be effective in promoting policy goals important in the American economy.” Its inclusion in the framework is a testament to the program’s track record and the need for additional resources to address our nation’s vast and growing shortage of affordable housing. This support for the program comes as the House version of the Affordable Housing Credit Improvement of 2017 (H.R. 1661) surpassed 100 co-sponsors last week, with 48 Republicans and 54 Democrats joining the bill to preserve and strengthen the Housing Credit.
The framework is silent on the tax exemption for private activity bonds, which provide critical financing to more than 40 percent of Housing Credit developments in the form of multifamily Housing Bonds, nor does it mention the New Markets Tax Credit (NMTC), which is essential for attracting private capital and jobs to the nation’s most distressed communities. It does, however, indicate that "while the framework envisions repeal of other business credits, the committees may decide to retain some other business credits to the extent budgetary limitations allow." Learn more about the tax reform framework in Enterprise’s blog post.
This initial proposal may be changed significantly as the House and Senate tax-writing committees work out details and attempt to reach a consensus, and the coming weeks and months will be critical for advocates to make the case for the Housing Credit, Housing Bonds and NMTC. As Terri Ludwig, President and CEO of Enterprise Community Partners, and Ed Brady, President of Brady Homes Illinois and immediate past chairman of the National Association of Home Builders, write in The Hill, tax reform should be an opportunity to strengthen what’s working, which means not only recognizing the value of retaining the Housing Credit “but seizing upon this moment to build a stronger housing policy for the future.”
Congress Poised to Advance 2018 Budget Resolution
Both chambers of Congress are expected to move their long-awaited fiscal year (FY) 2018 budget resolutions this week. The Senate Budget Committee will hold a mark-up of its budget resolution on October 4 and October 5, while the House is looking to bring their version to the floor sometime before Thursday afternoon. The contents of the Senate legislation have been under wraps for months as Republican lawmakers debated the scope of their tax plan. The text of the legislation was released on Friday, and is now ready to move after key legislators agreed to provide $1.5 trillion over a decade to cover the cost of tax cuts. Passing a budget resolution is a high priority for Republicans, who are planning to use a tool in the budget process known as reconciliation to enable them to advance tax reform through the Senate with a simple majority vote.
Enterprise Calls for More Long-Term Recovery Resources for Puerto Rico and U.S. Virgin Islands
Enterprise is urging Congress and the Administration to quickly provide more resources to help stem the growing humanitarian crisis in Puerto Rico and the U.S. Virgin Islands (USVI). The $15 billion disaster relief bill Congress passed earlier this month included $7.4 billion for long-term recovery through HUD’s Community Development Block Grant Disaster Recovery program (CDBG-DR). According to Enterprise Vice President Marion McFadden, this first round of appropriations is a “down-payment” that will get communities on the path to recovery, but more resources will be necessary to help communities recover, rebuild and futureproof their homes and communities. Learn more about the recovery efforts in Enterprise’s blog post.
Enterprise also joined a broad coalition of national, state and local organizations calling on Congress, FEMA and HUD to ensure that the federal response to Hurricanes Harvey, Irma and Maria is complete and equitable for everyone, especially families and individuals with the lowest incomes, who are often the hardest hit by disasters and have the fewest resources to recover afterwards.
Congress Considers Tax Relief as Disaster Recovery Efforts Continue
On September 28, Congress approved legislation introduced by Ways and Means Chairman Kevin Brady (R-TX-8) to provide limited tax relief to the communities affected by Hurricanes Harvey, Irma and Maria. This legislation does not include any affordable housing or community development provisions, although additional disaster tax relief legislation containing these provisions may still be considered. Rep. Tom Reed (R-NY-23) reintroduced the Natural Disaster Tax Relief Act (H.R. 3679) last month, which would provide a broad tax relief package that includes increased allocations of the Housing Credit and NMTC to federally declared natural disasters from 2012 through 2015. While no legislation has been introduced that would provide similar relief for the more recent disasters, members of Congress representing these communities may still introduce such legislation in the coming months. Read more about disaster tax relief legislation on Enterprise’s blog.
Secretary Carson Identifies Top Goals for HUD, Patenaude to Lead Disaster Recovery
Secretary Carson recently laid out his goals for HUD in an op-ed in The Hill, including organizing and delivering HUD services more efficiently; renewing HUD’s commitment to homeownership for first-time buyers and taking a “hard look” at the way HUD provides rental assistance; and expanding community investment through public-private partnerships to help households become more self-sufficient.
Secretary Carson has also said that HUD will make low-income housing a priority as it begins the process of distributing disaster recovery funds to the areas devastated by recent Hurricanes. According to Sec. Carson, much more aid will be needed than the $15 billion that Congress passed last month. Pamela Patenaude, who was sworn in as HUD’s new deputy secretary last week, will lead HUD’s long-term recovery efforts following Hurricanes Harvey, Irma and Maria, playing a primary and operational role in coordinating the work of 16 program and support offices within HUD to help state and local governments design and execute their recovery plans to rebuild damaged housing, businesses and critical infrastructure.
RESEARCH AND REPORTS
Enterprise Urges Focus on Renter Households During Recovery Efforts in Houston, Puerto Rico and Virgin Islands
A new analysis by Enterprise’s Andrew Jakabovics estimates that up to 105,000 units on almost 500 medium and large multifamily properties just in Harris County (location of Houston) could have been affected by last month’s historic flood waters. If a substantial share of the rental housing stock proves uninhabitable, low- and moderate-income renters may face extensive affordability problems, both from other renters – who make up 56 percent of Houston households – and temporarily displaced homeowners. Enterprise urges Congress and state and local officials to consider the needs of renter households, as well as homeowners, as recovery efforts continue in Houston. Learn more about this analysis in Enterprise’s blog post.
Jakabovics also released an initial assessment of the profound damage to housing that Hurricane Maria caused in Puerto Rico and the USVI. The full destruction is not yet known, but estimates indicate that the two territories may have to replace roughly 860,000 homes. Almost half of Puerto Rico’s residents lack potable water, many remote parts remain cut off from food and medical supplies and the island’s power grid was decimated. Without significant additional disaster recovery funding, repairs and rebuilding in Puerto Rico and the USVI will likely proceed intermittently if at all. Learn more about this analysis in Enterprise’s blog post.
ACTION Campaign Releases Updated District Fact Sheets on the Impact of the Housing Credit
The ACTION campaign has released updated fact sheets on the impact of the Housing Credit in each congressional district, including data on homes created or preserved, jobs supported and local income and tax revenue generated. As with the state fact sheets, which were updated last month, the new district fact sheets also include information on the affordable housing shortages that still remain in each state, underscoring the overwhelming need to strengthen and expand the Housing Credit.
2017 Paycheck to Paycheck Database Highlights Lack of Affordable Housing for Workers
The National Housing Conference (NHC) has released its 2017 edition of Paycheck to Paycheck, a database detailing the rental and homeownership affordability challenges of workers in 83 occupations in 203 metro areas nationwide. Compared to 2016, households need to earn an additional 4.49% in income in order to afford a 2-bedroom apartment in 2017, exacerbating the housing challenges felt by many workers, especially in higher-cost areas. The accompanying report also highlights the housing affordability challenges among five fast-growing healthcare occupations, finding that licensed practical nurses, the highest paid among the five occupations, can only afford to own a home in 70 of the 203 metro areas and to rent a two-bedroom home in 163 of them.
Enterprise and AI3 Propose Two New Tax Incentives for Impact Investing
Enterprise and the Accelerating Impact Investing Initiative (AI3) released a new paper, Encouraging Community Investments through CDFIs: Proposals for a New Federal Tax Incentive, that outlines two proposals for encouraging impact investments. Impact investments provide both a social return – such as small business expansion, job creation, or the development of affordable homes – and a financial return. Currently, however, impact investments are typically taxed at the same rate as investments that provide only a financial return, which can inhibit investments in these critical financial products. Enterprise and AI3 describe two proposals to increase impact investments: a tax exemption on income earned through the investment; and a tax credit worth a percentage of the investment. Learn more about the paper in Enterprise’s blog post.
CDFI Fund Releases Report on NMTC Investments
Last week, the U.S. Department of Treasury’s Community Development Financial Institutions (CDFI) Fund released a summary report and pubic data for the NMTC program through 2015. According to the report, over 68 percent of NMTC investments made through 2015 have been concentrated in single or mixed-use real estate, health care and social services, manufacturing and education. In addition, the data show that Community Development Entities (the organizations that receive and ultimately invest NMTC awards) go beyond the minimum statutory distress requirements of the NMTC program by committing to serve areas of higher need, and leverage the NMTC to offer financing with flexible or non-traditional rates and terms. This report from the CDFI Fund comes at the same time as leadership in Congress and the Administration propose a tax reform framework that is silent on the NMTC, leaving the program at risk for elimination.
Enterprise Launches Online Community Development Platform Opportunity360
Last week, Enterprise launched Opportunity360, a new online platform that measures the extent to which neighborhoods have access to opportunity and helps identify investments that improve lives and communities. It draws on more than 200 indicators organized around five categories – housing stability, education, health and well-being, economic security and mobility – as well as resident feedback aggregated into one web-platform. Opportunity360 offers one-click Measurement Reports that provide the framework and data necessary to assess both the available pathways to opportunity and the outcomes of opportunity in any neighborhood in the country. Visit the Opportunity360 platform to learn more.
STATE AND LOCAL POLICY
Detroit City Council Adopts New Affordable Housing Policies
The Detroit City Council recently voted to approve two new affordable housing ordinances. The first requires housing developers to set aside at least 20 percent of their units for lower-income residents if the developer receives more than $500,000 in local and federal public subsidies or discounted city-owned land for projects with 20 or more rental units. This inclusionary zoning ordinance also establishes an Affordable Housing Development and Preservation Fund to support the housing needs of residents at or below 50 percent of area median income (AMI). The second law that the City Council approved is a notification ordinance that protects seniors and low-income residents from unexpected displacement by requiring a 12-month advance notification of expiring affordability requirements. Elected officials in Detroit are considering anti-displacement policies to protect existing residents’ housing as the city welcomes jobs and economic growth back after years of disinvestment.
California Governor Signs Affordable Housing Bills into Law
Last week, Governor Jerry Brown signed a series of bills into law, including a new fee on real estate transactions estimated to generate $250 million a year and a $4 billion bond on the 2018 ballot, which voters will need to approve in the November 2018 elections. Together, these provisions would help subsidize new affordable housing and could finance about 14,000 additional units a year. The housing package also includes measures that will improve enforcement of local planning obligations, strengthen preservation efforts and allow jurisdictions to adopt local inclusionary policies. Enterprise supports these provisions and will continue to advocate for greater resources to fight California’s vast and growing affordable housing crisis.
IN CASE YOU MISSED IT
News Updates from Community Developments
In recent Community Developments, we highlighted new reports on consumer confidence and home prices and sales, the connections between the racial wealth disparities and housing, Seattle’s Mandatory Housing Affordability program, and much more. Sign up to receive Community Developments.
HEARINGS AND EVENTS
Upcoming Hearings and Mark-Ups
- October 3: Hearing on International Tax Reform, Senate Finance Committee
- October 3: Hearing on Sustainable Housing Finance: An Update from the Director of the Federal Housing Finance Agency, House Financial Services Committee
- October 4: Markup of the FY 2018 Budget Resolution, Senate Budget Committee
- October 5: Markup of the FY 2018 Budget Resolution, Senate Budget Committee
- October 5: Hearing on Small Business Tax Reform: Modernizing the Code for the Nation’s Job Creators, House Committee on Small Business
- October 2-4: 2017 I'M HOME Conference, Prosperity Now (Providence, R.I.)
- October 2-4: Housing Washington 2017 (Spokane, Wash.)
- October 2-6: A Community of Leaders: United in Vision, Acting for Justice!, CNHED (Washington, D.C.)
- October 3: Lessons Learned from Superstorm Sandy, Center for American Progress (Washington, D.C.)
- October 4: Ohio Housing Council Fall Symposium (Columbus, Ohio)
- October 4: A Community of Leaders: United in Vision, Acting for Justice, CNHED (Washington, D.C.)
- October 5: Novogradac 2017 Credit and Bond Financing for Affordable Housing Conference, Novogradac & Co. (New Orleans)
- October 5: Annual Mississippi Affordable Housing Summit, Mississippi Association of Affordable Housing Providers (Jackson, Miss.)
- October 5-6: New Jersey Governor’s Conference on Housing and Economic Development (Atlantic City, N.J.)
- October 5: Housing Insights: A New Tool for Preserving Affordable Housing in Washington, DC, Urban Institute (Washington, D.C.)
- October 6: Annual NPH Affordable Housing Conference, Non-Profit Housing Association of Northern California (San Francisco)
- October 9-12: Intersections 2017, Grounded Solutions Network (Oakland, Calif.)
- October 11-13: NOW! Annual Conference, Housing Colorado (Vail, Colo.)
- October 12-13: Affordable Housing Finance, Development, and Policy Exchange, National Housing & Rehabilitation Association (Washington, D.C.) October 14-17: 2017 Annual Conference & Showplace, National Council of State Housing Agencies (Washington, D.C.)
- October 17: The NHP Foundation 2017 Symposium & Dinner, The NHP Foundation (Washington, D.C.)
- October 17-18: Annual Conference & Trade Show, New England Affordable Housing Management Association (Norwood, Mass.)
- October 19: Novogradac 2017 New Markets Tax Credit Fall Conference, Novogradac & Co. (Chicago)
- October 19-20: 2017 Fall Seminar—The Mature Section 8 Project, National Leased Housing Association (Washington, D.C.)
- October 23-26: ULI Fall Meeting, Urban Land Institute (Los Angeles)
- October 25: Transforming Communities with Affordable Housing, IPED (Austin, TX)
- October 25-26: 2017 North Carolina Affordable Housing Conference, North Carolina Housing Coalition (Raleigh, N.C.)
- October 26: 2017 NMCEH Sixth Annual Conference, Housing for All, New Mexico Coalition to End Homelessness (Albuquerque, N.M.)
- October 27-29: NAHRO National Conference & Exhibition, National Association of Housing and Redevelopment Officials (Pittsburgh)
- October 29-November 1: LeadingAge Annual Meeting & EXPO, LeadingAge (New Orleans)
- November 1: Housing Finance, Affordability, and Supply in the Digital Age, Urban Institute (Washington, D.C.)
- November 8-10: Greenbuild, The U.S. Green Building Council (Boston)
- November 8:10: 2017 Rural Housing Summit, California Coalition for Rural Housing (Pacific Grove, Calif.)
- 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 29: Solutions for Affordable Housing, National Housing Conference (Washington, D.C.)
- November 30: Novogradac 2017 Tax Credit Housing Finance Conference, Novogradac & Co. (Las Vegas)