Wyden-Cantwell Introduce Emergency Affordable Housing Act Containing Housing Credit Priorities
On June 25, Senate Finance Committee Ranking Member Ron Wyden (D-OR) and Senator Maria Cantwell (D-WA) introduced the Emergency Affordable Housing Act of 2020, which would strengthen and expand the Low-Income Housing Tax Credit (Housing Credit) in light of the Covid-19 pandemic and economic crisis. The bill is cosponsored by Senators Michael Bennet (D-CO) and Ben Cardin (D-MD).
The bill includes the ACTION Campaign’s top Housing Credit priorities for Covid-19 response, other key provisions from the Affordable Housing Credit Improvement Act, Enterprise Housing Credit priorities, and several new Housing Credit proposals. Several key provisions of the Wyden-Cantwell bill are a permanent 4 percent Housing Credit rate, an increase in Housing Credit allocation, a lowering of the “50 percent test” for bond-financing, and a correction to Qualified Contracts.
Enterprise strongly applauds Ranking Member Wyden and Senator Cantwell for their leadership on affordable housing in response to the Covid-19 crisis, and urges Congress to advance these Housing Credit provisions.
The Emergency Affordable Housing Act is the standalone Senate companion legislation to the Housing Credit provisions included in The Moving Forward Act, the House infrastructure legislation released on June 22.
The Emergency Affordable Housing Act of 2020 would:
- Temporarily extend the rehabilitation expenditure deadline by 12 months (from 24 to 36 months), applicable to properties that receive an allocation of Housing Credits between December 31, 2016 and January 1, 2022;
- Temporarily extend the 10 percent expenditure rule deadline by 12 months (from 12 to 24 months after the date of allocation) and the placed in service deadline by 12 months (from the end of the second calendar year following the year of allocation to the end of the third calendar year following the year of allocation), applicable to properties that receive an allocation of Housing Credits between December 31, 2016 and January 1, 2022;
- Lower the “50 percent” threshold for tax-exempt bond financed developments to qualify for the 4 percent Housing Credit to 25 percent;
- Set a permanent minimum 4 percent Housing Credit rate for tax-exempt bond financed developments;
- Make permanent the 12.5 percent expansion in the 9 percent Housing Credit passed in 2018 and increases the 9 percent Housing Credit allocation and the small state minimum, phased in over two years (this would permanently increase the annual Housing Credit authority from $2.81 per capita to $4.56 per capita, and increase the small state minimum from $3,217,500 to $5,214,051);
- Provide a 50 percent basis boost for the portion of properties serving extremely low-income (ELI) households (available to properties where 20 percent or more of the units are designated for ELI households), and a a 10 percent increase in state Housing Credit allocations for these properties;
- Provide developments in Indian areas with a 30 percent basis boost by defining Indian areas as difficult development areas (DDAs);
- Provide developments in rural areas with a 30 percent basis boost by defining rural areas as difficult development areas (DDAs);
- Enable state housing agencies to provide a 30 percent basis boost as needed for properties financed by Housing Bonds;
- Repeal the Qualified Contract provision in the tax code that allows owners to terminate the affordability restrictions on a property before the end of the property’s extended use period for properties which receive Housing Credit allocations after December 31, 2019, and modify the Qualified Contract pricing on existing properties (receiving Housing Credit allocations before January 1, 2020) to be fair market value as determined by housing credit agencies;
- Prohibit the consideration of local or elected official support or opposition or local government contributions in Qualified Allocation Plans;
- Provide the option of claiming 150% of otherwise allowable credits for the first or second taxable year of a building’s credit period for building’s whose first year in the credit period ends between July 1, 2020 July 1, 2022, which also have construction or leasing delays occurring on or after January 1, 2020, and allow the credit boost to be recaptured in subsequent years pro rata, in order to accommodate credit adjuster issues in light of Covid-19; and
- Create a new tax credit for investors equal to 25 percent of a qualified supportive housing contribution, with a max contribution amount of $120,000 per low-income unit.