In recent years, the affordable housing crisis in the United States has become increasingly pronounced, thrusting the conversation about legislative action to the forefront. Housing advocates are turning their attention to the House Committee on Ways and Means, urging swift passage of measures that would broaden the application of Private Activity Bonds (PABs) to bolster efforts in affordable housing. Emily Cadik, the CEO of the Affordable Housing Tax Credit Coalition (AHTC), has voiced a sense of cautious optimism about potential legislative movement during the imminent lame duck session of Congress. She underscored the necessity of proposals designed to enhance the allocation of housing credits, particularly focusing on reducing the financing threshold for crucial housing projects.
The inception of tax teams within the Ways and Means Committee, initiated by Chair Jason Smith, presents a strategic opportunity for advocates. These teams are tasked with soliciting public commentary regarding the Tax Cuts and Jobs Act (TCJA), which is poised to sunset by the end of 2025. The AHTC has seized this chance to reiterate its commitment to the Affordable Housing Credit Improvement Act, a bill that has, regrettably, languished in Congress since 2016. A fresh iteration of this legislation made its debut in both the House and Senate in May 2023, advocating a reexamination of the bond financing thresholds necessary for accessing Low Income Housing Tax Credits (LIHTCs)—an essential component in the financing landscape for affordable housing.
Proposed Legislative Changes and Their Implications
Under current regulations, developers are mandated to secure at least 50% of a project’s financing through private activity bonds to qualify for the often-essential 4% Housing Credits. The rationale behind advocating for a reduction of this threshold to 25% is multifaceted. Proponents argue that lower requirements could not only streamline the financing process but also unlock substantial private funding opportunities for affordable housing developments across states. AHTC posits that such changes would enable states to optimize their bond volume caps and subsequently finance a larger number of affordable housing projects—a necessity in the face of overwhelming demand.
As a testament to the widespread consensus on the urgency of this issue, the National Council of State Housing Agencies (NCSHA) has also echoed AHTC’s sentiments, sending a letter of support to the Ways and Means Committee. Their commentary aligns with calls to permanently eliminate the caps on mortgage revenue bonds and multifamily housing bonds for a duration of five years, stressing the need for a regulatory environment conducive to meeting escalating demands for affordable housing.
Political Will and Bipartisan Support
The presence of broad support emanating from both sides of the aisle offers a glimmer of hope for proponents of affordable housing legislation. The NCSHA’s Jennifer Schwartz commended the Vice President’s stated priorities related to housing, which include expanding production through the housing credit initiative. This bipartisan backing could, optimistically, pave the way for progress—even in a politically polarized environment.
Cadik highlighted the potential ramifications surrounding tax legislation that may not progress during the lame duck session. The wind-down of the TCJA and the subsequent need for bi-partisan cooperation on tax reform provide a window of opportunity to revive and advance affordable housing legislation. With the upcoming expiration of several trillion dollars in tax cuts anticipated to ignite discussions on reform, both Cadik and Schwartz underscore the urgent need for concerted action to halt significant tax increases.
As the legislative landscape evolves, the urgency for comprehensive affordable housing reform cannot be overstated. The proposals centered around expanding PAB utilization and lowering financing thresholds are not merely bureaucratic changes; they represent critical interventions that can catalyze substantial progress in the battle against housing unaffordability. As stakeholders navigate the complexities of legislative advocacy and public policy, the prevailing hope is that, with sustained efforts and collaboration across party lines, concrete actions will follow suit, facilitating transformative advancements in the nation’s housing landscape. The time for action is now—local communities rely on the decisions made today to create equitable and sustainable housing solutions for tomorrow.