CARH’s BROADCAST EMAIL – Legislative Update

November 13, 2017

The U.S. House of Representatives (House) Ways and Means Committee advanced last week H.R. 1, Tax Cuts and Jobs Act, on a party-line vote. The full House is expected to vote on that measure this week.

As reported in CARH’s Broadcast Email on November 3^rd, the House legislation would severely affect the 9% Housing Credits, even while retaining them. While the House Ways and Means Committee amended H.R. 1 during Committee’s mark-up last week, none of the changes would reverse the bill’s harmful effects on affordable housing – an estimated reduction of nearly one million affordable homes over the next decade due to the lowering of the corporate rates and elimination of Private Activity Bonds (PABs), and the use of the 4% Housing Credit.

This week, the U.S. Senate (Senate) will begin its legislative process as it begins work on its own tax reform legislation. The Committee is working off of a Chairman’s Mark. While there are various summaries of key provisions, based on the over 350 amendments already filed, the Senate mark-up will likely change the final product coming out of the Senate Finance Committee (SFC). The current list of SFC amendments is available here: https://www.finance.senate.gov/imo/media/doc/Master%20Amendment%20List.pdf.

As of this writing, the SFC’s version appears more favorable to the affordable housing industry, but concerns remain:

• The Low-Income Housing Tax Credit (Housing Credit) would be retained, with no changes.
• PABs, including multifamily Housing Bonds, which provide critical financing to more than half of all Housing Credit developments, would remain.
• The corporate tax rate would be reduced from 35 to 20 percent, effective in 2019.  However as with the House bill, Senate bill does not make any adjustments to sustain Housing Credit investment in light of the lower corporate rate.

While CARH is pleased that the SFC Chairman, Senator Orrin Hatch, rejected the House’s approach on PABs, it is important that there be some adjustment made to the Housing Credit, so that the value of the credits remain when the corporate tax rate is adjusted.

Included in the 350+ amendments, is one that contains much of Senators Maria Cantwell (D-WA) and Chairman Hatch’s S. 548, the Affordable Housing Improvement Act, that has been strongly supported by the affordable housing industry. Another amendment, from Senator Pat Roberts (R-KS), also championed by the affordable housing industry, increases the Housing Credit for rural properties and properties dedicated to veterans. We understand that there will also be amendments that will maintain the productivity of the Housing Credit in a lower corporate tax rate environment. Amendments are also being offered to continue and make permanent the New Markets Tax Credit and providing the Historic Tax Credit applies at 20% of qualified rehabilitation expenditures, claimed over 5 years.

While significant progress has been made from the House to the Senate, it is important that CARH members this week continue to weigh in with their Senators, particularly those who sit on the Senate Finance Committee. You should thank your Senators for efforts that will improve from the House version, the tax reform bill moving now in the Senate. Further improvements are still needed to the Senate’s bill. Even with PABs included in the final legislation about 20% of the value of Housing Credits will be lost. View the National Summary chart from Novogradac/NAHB, by clicking here, and the State by State break down by clicking here.

To contact your Senators, click here.  It is unlikely that any amendments will be allowed to be offered when the full House considers the bill later this week.  However, it is still important that your Representatives continue to hear from you concerning H.R. 1 as reported by the Ways and Means Committee.  To contact your Representatives, click here. Social media (i.e., Twitter and Facebook) is also a very effective way to deliver your message. (The contact links also include links to your members of Congress social media pages.) Whichever contact method you use, it is important that you make your message personal. Your message should be one that will show the impact of changes to your portfolio and to rural housing across the country.  Specific examples are important especially when legislation is being considered that will negatively impact your business as well as the residents who live in your affordable apartment communities.

Please also note that Congress has several other key measures to tackle before the end of the year including on December 8^th the Continuing Resolution expires and further spending legislation is needed.  

CARH will continue to keep members apprised of developments as they occur.

If you have any questions or comments, please contact CARH at 703-837-9001 or carh@carh.org.