Year-End Tax Package Extends NMTCs, Provides Housing Credits for California Disaster Relief
Very late on Monday, negotiations around the year-end tax package concluded with a mix of wins and disappointments for affordable housing and community development advocates. All day, tax negotiations appeared to be advancing toward a large tax package; however, in the final hours, negotiations between Congressional leadership and the White House stalled and ultimately concluded with a “skinny” tax package. To be celebrated, the tax package includes a one-year extension and expansion of the New Markets Tax Credit (NMTC), however, it lacks national Low-Income Housing Tax Credit (Housing Credit) provisions despite tremendous bipartisan support. The final tax package is attached to minibus H.R. 1865 and is expected to be passed by Congress this week.
The final tax package includes the extension of 34 expired or expiring tax provisions, the majority of which had expired as of 2017. The NMTC was one of six provisions expiring at the end of this year. The tax package would extend the NMTC one-year to December 31, 2020 and would also increase NMTC allocation authority from $3.5 billion to $5 billion. This expansion marks the first increase in the baseline NMTC allocation amount since 2007. Enterprise thanks lawmakers, especially the champions of NMTC extension legislation Senators Roy Blunt (R-MO) and Ben Cardin (D-MD) and Representatives Tom Reed (R-NY) and Terri Sewell (D-AL), for extending and expanding this critical community development tax credit that has made possible impactful projects serving low-income communities’ needs.
The tax package also includes nearly $1 billion of disaster Housing Credits for 2017-2018 California wildfires areas as part of California’s 2020 Housing Credit allocation authority. This is a significant increase in Housing Credit resources for California that will be instrumental as the state rebuilds post-fires.
While both outcomes are to be celebrated, many advocates, stakeholders, and champions were disappointed that the larger tax package fell apart in the final hours. The more expansive tax package initially included numerous additional tax provisions including a minimum 4 percent Housing Credit rate – a key provision of the Affordable Housing Credit Improvement Act. Unfortunately, the 4 percent Housing Credit rate and many other tax priorities did not make it into the final tax package in the end due to larger politics beyond our control.
Nonetheless, advocates should be proud that the 4 percent Housing Credit rate was recognized as a priority and included in the initial tax package. The Affordable Housing Credit Improvement Act will conclude 2019 as an impressively bipartisan and popular bill – with more than 1/3 of the Senate and 44 percent of the House as cosponsors – and is positioned even more strongly for future opportunities to advance.
Enterprise and the ACTION Campaign thank each and every partner who uplifted the need to strengthen and expand the Housing Credit. We also thank the many Members of Congress who called for the Housing Credit to be included in the year-end tax package. We especially thank our champions Senators Maria Cantwell (D-WA), Todd Young (R-IN), Ron Wyden (D-OR), and Johnny Isakson (R-GA), and Representatives Suzan DelBene (D-WA), Kenny Marchant (R-TX), Don Beyer (D-VA), and Jackie Walorski (R-IN) for their tireless leadership, and we will be ready to work together again in 2020 to advance key affordable housing policies.