The Low-Income Housing Tax Credit community continues to score victories in Congress as we seek more resources for affordable housing development to help respond to the nationwide shortage of affordable housing. Most noteworthy in 2020 was the enactment of the minimum 4% tax credit after many years of effort. This will make it much more financially feasible to develop Housing Credit properties using tax-exempt bonds and should be especially consequential in lower-income rural states where multifamily bond usage has been financially infeasible. According to an analysis by Novogradac Inc., the 4% minimum credit should increase affordable housing unit production by nearly 130,000 units over the next decade.
Our success obtaining enactment of this provision is testament to the strong bipartisan support the Housing Credit program has been able to generate. In fact, the major Housing Credit legislation the industry has been working on, the Affordable Housing Improvement Act (AHIA), attracted the cosponsorship of 234 members of the House – over half the body – and 42 U.S. Senators in the last Congress. This level of support does not happen by itself but requires the hard work all parts of the Housing Credit community have devoted to telling the story of affordable housing and the great need for more resources.
Of course, only one provision from the AHIA was enacted last year – albeit one of the most important – so we need to build on that success to get more provisions enacted. In that regard, the 2020 elections may prove to be quite important for affordable housing. During the presidential campaign, President Biden put forth perhaps the most ambitious program for affordable housing in the history of presidential contests, including proposing more resources for the Housing Credit program. In addition, we have a new chairman of the Senate Finance Committee, Ron Wyden (D-OR), who has been a strong supporter of the Housing Credit program. Last year, he joined together with the chairman of the House Ways and Means Committee to author major affordable housing legislation that included several changes to the Housing Credit program, some taken from the AHIA.
These changes were included in major infrastructure legislation that passed the House in 2020. That legislation was groundbreaking, not only because it proposed considerably more resources for affordable housing – almost $90 billion over ten years – but also because it established the precedent that affordable housing is an essential part of the nation’s infrastructure and belongs in any major infrastructure bill. Senator Wyden, joined by our main Housing Credit advocate in the Senate – Senator Cantwell – took the affordable housing provisions from the House infrastructure measure and introduced a separate bill, the Emergency Affordable Housing Act of 2020. While these measures ultimately were not enacted into law, they serve as a good basis for legislation in the new Congress.
Now that we are in the 2121 legislative session, the expectation is that there will be a major effort to move an infrastructure bill this summer that will include much of President Biden’s initiatives. We have high hopes that this legislation will once again contain an affordable housing title that will include many of the provisions from the AHIA. Legislating in the Senate is particularly difficult given the 60 vote threshold required to overcome filibusters so the Democratic leadership intends to use a special budget reconciliation process that permits consideration of fiscal measures with a simple majority vote. This was the process used to pass the $1.9 trillion COVID relief bill in March 2021 and the 2017 tax cut bill that reduced the top corporate tax rate to 21% among other items. Even with a simple majority vote, the prospects for enactment of a major infrastructure bill are by no means certain given the 50-50 Senate split and the likely opposition of Republican Senators, but this is our best opportunity.
It is both a point of pride and a strategic advantage for us that the Housing Credit has always enjoyed bipartisan support and we must work to maintain that status as we continue to engage our elected officials. Inclusion in what may turn out to be a partisan infrastructure bill will not change that situation as long as we continue to work closely with both our Republican and Democratic supporters.