Program has created 2.4 million housing units, supports 95,000 jobs
WASHINGTON, D.C. – May 6, 2015 – (RealEstateRama) — Today, U.S. Senator Maria Cantwell (D-WA) and Senator Pat Roberts (R-KS) introduced bipartisan legislation to reauthorize a critical tax provision for improving access to affordable housing and spurring private investment in developments that support small businesses and construction jobs nationwide.
The Low-Income Housing Tax Credit (LIHTC) is the primary tool for financing 90 percent of affordable housing projects in the United States. The “Improving the Low-Income Housing Tax Credit Rate Act” would improve the existing LIHTC by providing greater certainty for new housing construction.
“The Low-Income Housing Tax Credit supports more than 90,000 jobs each year nationwide and has helped leverage nearly $100 billion in private investment in these critically needed affordable housing units,” said Cantwell, a member of the Senate Finance Committee. “That’s why we must permanently extend this critical provision without delay and give states the certainty they need to help address the affordable housing crisis in this country.”
“I have long supported the Low-Income Housing Tax Credit and will push for its inclusion in any tax reform plan to be considered by Congress,” said Roberts, a member of the Senate Finance Committee. “The Low-Income Housing Tax Credit program is one of the federal government’s primary policy tools for encouraging the development and rehabilitation of affordable rental housing. The program has been particularly important in Kansas, where numerous projects have been put online in rural areas, for returning military personnel, and for veterans by using the low-income housing tax credit.”
Cosponsors include Senators Richard Blumenthal (D-CT), Cory Booker (D-NJ), Barbara Boxer (D-CA), Ben Cardin (D-MD), Mike Crapo (R-ID), Dianne Feinstein (D-CA), Al Franken (D-MN), Kirsten Gillibrand (D-NY), Mazie Hirono (D-HI), Angus King (I-ME), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Robert Menendez (D-NJ), Patty Murray (D-WA), Bernie Sanders (I-VT), Chuck Schumer (D-NY), Jeanne Shaheen (D-NH), Debbie Stabenow (D.MI), Elizabeth Warren (D-MA) and Sheldon Whitehouse (D-RI).
The program has created more than 2.4 million affordable apartments nationwide for the elderly, disabled, and homeless. It supports 95,000 American jobs each year.
Under the program, states are issued tax credits by the U.S. Treasury Department, which they use to attract private investment into affordable housing projects. The legislation would permanently extend the rate to 9 percent of eligible costs on new construction and 4 percent for the acquisition of existing housing. The 9 percent floor has since expired, which resulted in Congress retroactively extending it for one year at the end of 2014. The current LIHTC has a variable rate that is linked to federal borrowing costs, which makes financing of affordable housing less predictable.
“The Low-Income Housing Tax Credit Program is the most successful and most flexible federal housing program in existence,” said Kim Herman, Executive Director of the Washington State Housing Finance Commission. “It is the only program that works just as well in urban and rural areas and can benefit large and small households, farmworkers, formerly homeless persons and low-income people across the state to meet the many affordable housing needs of Washington’s communities.”
Since the program was created in 1986, the LIHTC has helped finance approximately 56,000 affordable housing units in Washington state. Between 1987 and 2014, the 9 percent tax credit program supported 642 affordable housing projects throughout Washington state, providing more than 32,875 units of affordable housing.
In 2014, about $158 million in 9 percent credits were allocated to 17 affordable housing projects throughout Washington, which resulted in 948 affordable housing units. These units supported 1,399 jobs for local residents, $73.2 million in local income and $6.9 million in taxes and other local government revenues during the development and construction period, according to National Association of Homebuilders’ estimates.
“Low-Income Housing Tax Credits bring critical financial resources to rural, affordable housing,” said Marty Miller, Executive Director of the Office of Rural and Farmworker Housing in Yakima. “Locking in the rates gives us the assurances and consistency we need to secure much-needed financing and meet critical housing needs.”
“Senators Cantwell and Roberts show tremendous leadership in introducing this legislation to strengthen the Housing Credit’s ability to address our nation’s growing affordable housing crisis,” said Todd Crow, President of the Affordable Housing Tax Credit Coalition. “The expiration of the minimum credit is reducing access to resources to fund affordable housing while the need is skyrocketing. A permanent floor on the credit rate will increase housing availability for low-income families, veterans, seniors and individuals who are homeless or living with disabilities.”