Legislation builds on effort to create 400,000 additional affordable housing units across U.S
WASHINGTON, D.C. – (RealEstateRama) — U.S. Senate Finance Committee member Maria Cantwell (D-Wash.) and Senate Finance Committee Chairman Orrin Hatch (R-Utah) introduced the bipartisan Affordable Housing Credit Improvement Act of 2016. This legislation continues the effort to expand the Affordable Housing Tax Credit by 50 percent to help combat the country’s growing affordable housing crisis, and includes major, comprehensive reforms to the program to enable it to better serve the extremely low income, homeless, rural and Native American communities. The bill is also co-sponsored by Senator Ron Wyden (D-OR), ranking member of the Finance Committee.
This new legislation builds on the previous Cantwell/Hatch proposal to create an expanded Housing Credit that would help create or preserve approximately 1,300,000 affordable homes over a 10 year period – an increase of 400,000 more units than is possible under the current program.
“The Housing Credit leverages private equity investment to create 100,000 jobs in our communities each year,” said Senator Cantwell. “Senator Hatch and I want to expand this proven economic development tool and job creation engine to provide even more affordable housing that America desperately needs.”
“With this legislation, we can help lift local communities across the country and ensure more individuals and families with limited means have better access to affordable housing,” said Hatch. “I applaud Senator Cantwell for her leadership on this issue.”
In addition to greatly expanding the number of credits, this new legislation includes several important program improvements, including:
Preservation of Affordable Housing – Provides for a purchase option that will allow non-profit and government sponsors to acquire Housing Credit properties when the current 15 year compliance period expires and keep properties affordable for future generations.
Homelessness and Extremely Low Income Families – Provides a new incentive for projects that target homeless or extremely low income individuals and families. These projects will be eligible to receive a 50 percent credit boost, allowing them to remain financially feasible while targeting the neediest populations.
Energy Efficiency – Allows Housing Credit properties to claim clean energy credits that were previously unavailable to them, including the energy efficient new homes credit and the energy efficient commercial building deduction, and the energy investment tax credit.
Native American Housing – Requires states to consider the needs of Native Americans when allocating Housing Credits and provides additional support to projects located in Indian areas by automatically making them eligible for an additional 30 percent credit boost if necessary for financial feasibility.
Rural Project Support – Improves the ability of the Housing Credit to serve rural areas by standardizing tenant income limit rules for projects in rural areas.
The bill contains additional provisions from previous legislation creating a new income-averaging option to help developments maintain financial feasibility while providing a deeper level of affordability. The bill also enacts a permanent 4 percent credit rate floor for acquisition and bond-financed projects, providing more predictability and flexibility in financing these projects.
Earlier this year, Cantwell, along with the ACTION Campaign – a coalition of 1,300 affordable housing organizations across the country – began a national campaign in Seattle to increase federal resources for affordable housing and build support for expanding the Low Income Housing Tax Credit. Cantwell has held events in Tacoma, Spokane, Walla Walla, Kitsap and New York City.
Cantwell also released a report, “Addressing the Challenges of Affordable Housing & Homelessness: The Housing Tax Credit,” which found that across the country there are 3.9 million extremely low-income families – 169,000 of whom live in Washington state – that lack access to affordable housing. The report also noted that the January 2015 point-in-time homelessness count documented 564,708 individuals experiencing homelessness across the United States.
In December of last year, Cantwell championed the Housing Credit and secured a critical fix to the program by permanently extending the credit rates to 9 percent of eligible costs on new construction. This ended an era when variable rates made financing of affordable housing less predictable.
Since its creation 30 years ago, this tax credit has financed nearly 2.9 million homes across the United States, leveraging more than $100 billion in private investment. Between 1986 and 2013, more than 13.3 million people have lived in homes that have been financed by the Housing Credit.