Wyden's DASH Act Signals Strong Support for Housing Priorities
On August 18, Senate Finance Committee Chair Ron Wyden (D-OR) released the Decent, Affordable, Safe Housing for All Act (DASH Act), comprehensive housing legislation that includes a number of Enterprise’s key affordable housing tax and appropriations priorities. With the Senate in recess, the bill will be formally introduced when the chamber reconvenes in September.
The timing of this announcement is notable, as the Senate and House are expected to start work soon to flesh out the details for a historic investment in infrastructure that Congress has been working on over the past few months. There is a two-track process underway, with a bipartisan package ringing in at $1.2 trillion and a $3.5 trillion package that is expected to include additional infrastructure priorities from Democrats like many of those outlined in Senator Wyden’s new bill.
Key Tax Provisions
The Low-Income Housing Tax Credit
The DASH Act contains several provisions focused on strengthening and expanding the Low-Income Housing Tax Credit (Housing Credit), which works by incentivizing private investment in affordable housing and is our nation’s most critical tool in creating and preserving affordable homes. In fact, the Housing Credit is responsible for financing nearly all affordable housing development since its inception in 1986.
Among the most critical of those DASH Act provisions are some that will sound familiar to those acquainted with the Affordable Housing Credit Improvement Act (AHCIA), bipartisan, bicameral legislation introduced in April of which Senator Wyden is one of the lead cosponsors.
The three major unit financing provisions from the AHCIA included in the DASH Act are:
- Increasing the 9 percent Housing Credit tax incentive by 50 percent, which would finance an estimated 299,000 additional affordable rental homes over 2021-2030;
- Lowering the bond financing requirement for properties to receive the full 4 percent credit from 50 percent to 25 percent for four years, allowing states to more efficiently and effectively use their bond cap authority to build additional affordable housing; and
- Providing additional upfront equity – known as basis boosts – for certain projects that need it, including those in rural, Native American, and Extremely Low Income communities, or for bond-financed properties that receive the lesser, 4 percent Housing Credit.
The DASH Act includes additional provisions outside of the AHCIA that Enterprise has long advocated for to strengthen the Housing Credit program, including the repeal of qualified contracts (QCs) and the modification/clarification of the right of first refusal (ROFR). The QC correction would close a loophole in the tax code allowing properties to get out of their affordability requirements after just 15 years – rather than 30 years as intended by Congress. At present, this loophole is resulting in the loss of an estimated 10,000 low-income homes annually. The modification/clarification of the ROFR would enable nonprofit Housing Credit property owners to buy the buildings they develop for a minimal price, as Congress intended, at the end of the 15-year compliance period, when the tax credit investor exits the partnership agreement.
In addition, the legislation includes other important provisions that Enterprise supports, including to elect an accelerated first year credit amount to compensate for Covid-related delays, as well as provisions to extend the deadline for rehabilitation expenditures and to extend the deadline for a building to be placed in service and remain eligible for an allocation of Housing Credits.
The Neighborhood Homes Investment Act
Senator Wyden’s legislation also includes the Neighborhood Homes Investment Act (NHIA), a new federal tax credit modeled after the Housing Credit. Legislation to create this new incentive to promote homeownership in low-income communities was introduced earlier this year in both the House and the Senate, in addition to its inclusion as a priority in the President’s Fiscal Year 2022 Budget and American Jobs Plan—details of which were included in the Treasury’s Green Book.
A state-administered tax subsidy, the NHIA would encourage investment in distressed urban, suburban, and rural neighborhoods that face a “value gap” – where the cost of rehabilitating or building a home is greater than the post-construction value of that home. The program would target communities facing the greatest need – those with high poverty rates, low median family incomes, and low home values – and could revitalize an estimated 500,000 homes, creating $100 billion in development revenue over the next 10 years.
The DASH Act also includes a number of provisions that would increase the funding for critical affordable housing programs that would help address the growing housing needs in our country, especially for those experiencing homelessness, as well as for families and young children who are deeply impacted by housing instability. These critical investments include:
- The establishment of a permanent, mandatory Housing Choice Voucher – available at the request of public housing authorities – phased in at 250,000 vouchers in year one and 400,000 vouchers annually every year thereafter, until all eligible recipients have a voucher;
- $10 billion of additional funds in the next 10 years to the Housing Trust Fund, a program that provides grants to states to produce and preserve affordable housing for extremely low- and very low-income households;
- $65 million a year for five years for the administrative and capacity-building needs of states to accomplish housing goals under the DASH Act, including using the increased Housing Trust Fund allocation to end homelessness;
- $10 million over five years for a modular construction (prefabricated buildings constructed away from the building site) pilot program;
- Grants for jurisdictions that change their zoning and land use for any approved, pro-housing activities as determined by the Community Development Block Grant program (Cities under 80,000 residents would be awarded a maximum of $5 million while cities larger than 1 million could be awarded up to $125 million);
- The permanent authorization of appropriations for McKinney-Vento Homeless Assistance Grants in order to provide supportive services to voucher recipients under the Homeless Assistance Grants program;
- Investment in rural areas and for domestic farm laborers through the Section 514 Farm Labor Housing Loan program and the Section 516 Farm Labor Housing grant program by $78 million annually from 2022 to 2032, the Section 515 Rural Development program by $100 million annually for 2022 through 2032, and the Section 521 Rural Rental Assistance program by $2.5 billion from 2022 to 2032; and
- $250 million for ten years to pay increased rental assistance to low-income Americans in rural areas, as well as the permanent reauthorization of the multi-family preservation and revitalization program, which would require the Department of Agriculture (USDA) to implement a program for the preservation and revitalization of housing projects that are financed with USDA loans, including by restructuring existing loans.
Senator Wyden, as Chairman of the Senate Finance Committee, will play a key role in the drafting of the tax provisions for the Democrats’ infrastructure priorities in the reconciliation package. The DASH Act is a strong signal from Senator Wyden on what he views as critical affordable housing provisions to be considered for the package.
The budget resolution passed by the Senate last week provided Congressional committees with instructions on spending and revenue topline figures, under which the committees will work to draft the detailed legislative changes and program spending. The Senate Finance Committee has a more complicated role than other Senate committees for this legislative effort. The Finance Committee is tasked with raising revenue through taxes to cover the costs of the other committees’ priorities, in addition to funding any tax credit programs it wants to include in the package, with specific instructions to reduce the deficit by $1 billion over 10 years.
Because this package is expected to proceed through the reconciliation process—a parliamentary procedure that lowers the votes needed to pass the package from 60 votes to a simple majority—there are some hurdles. The process requires all provisions in the legislation to have a budgetary implication under what is known as the Byrd Rule. Therefore, some of the provisions in the DASH Act (and the AHCIA) may not be eligible for inclusion, since they do not have a cost or raise revenue. There are still significant portions of the DASH Act that would qualify under these rules, including most of those detailed under the tax and appropriations sections above.
Speaker Nancy Pelosi (D-CA) has called the House back early from its summer recess, with members set to return to Washington on August 23 for consideration of the budget resolution. Instructions included in the resolution direct the House and Senate committees to move their recommendations by September 15.
Enterprise commends Senator Wyden for this critical and comprehensive affordable housing legislation, and we will continue to advocate for our key tax and appropriation priorities as reconciliation negotiations proceed in the coming weeks. Read more about the DASH Act in Senator Wyden’s press release announcing the legislation.