Congress Expands, Strengthens the Housing Credit in FY 2018 Omnibus
President Trump signed the fiscal year (FY) 2018 omnibus spending package into law on March 23, enacting two key provisions from the Affordable Housing Credit Improvement Act:
- A 12.5 percent increase in Housing Credit allocation authority for four years (2018-2021). While this is not as significant an increase as the 50 percent phased-in permanent cap increase proposed in S. 548, it provides a substantial level of new resources and will allow for the construction or rehabilitation of an additional 28,400 affordable rental homes over the next decade, according to Novogradac & Co. estimates. This is the first expansion of the Housing Credit in ten years.
- Income averaging, on a permanent basis moving forward. Income averaging would allow Housing Credit units to serve households earning up to 80 percent of area median income (AMI), offset by deeper targeting in other units to maintain average affordability in the development at 60 percent AMI. The 60 percent AMI ceiling would apply to the average income limit for all apartments in a development rather than each individual Housing Credit apartment.
The ACTION Campaign released a statement thanking Congress for including these provisions in the omnibus.
We encourage all ACTION Campaign members to reach out to your members of Congress who co-sponsored the Affordable Housing Credit Improvement Act (S. 548 or H.R. 1661) and thank them for their support of the Housing Credit. For sample thank you language and other advocacy resources, visit the ACTION Campaign’s Advocacy Toolkit.
While the temporary 12.5 percent increase will not fully make up for the projected loss of Housing Credit production as a result of tax reform – an estimated 235,000 homes over ten years – it is a very significant first step and offers an important down payment on the nationwide shortage of affordable rental housing. ACTION remains committed to working with our congressional partners to advance the remaining provisions in the Affordable Housing Credit Improvement Act, including the minimum four percent Housing Credit rate.
Affordable Housing Credit Improvement Act Co-Sponsorship Update
Several new members have joined as co-sponsors of the Affordable Housing Credit Improvement Act on both the House (H.R. 1661) and Senate (S. 548) versions of the bill. In the House, Rep. James Langevin (D-RI-2), Rep. Michael Capuano (D-MA-7), Rep. Richard Hudson (R-NC-8), Rep. Sean Patrick Maloney (D-NY-18), Rep. Joe Courtney (D-CT-2), Rep. Tom Emmer (R-MN-6), Rep. James McGovern (D-MA-2), and Rep. Alma Adams (D-NC-12) have co-sponsored the Curbelo-Neal bill, bringing total co-sponsorship to 143 members of Congress, including 74 Democrats and 69 Republicans.
15 Democratic members and one Independent have also been formally reflected as co-sponsors on the Cantwell-Hatch version of the bill. These co-sponsors include Sen. Amy Klobuchar (D-MN), Sen. Kirsten Gillibrand (D-NY), Sen. Robert Menendez (D-NJ), Sen. Edward Markey (D-MA), Sen. Heidi Heitkamp (D-ND), Sen. Debbie Stabenow (D-MI), Sen. Benjamin Cardin (D-MD), Sen. Sheldon Whitehouse (D-RI), Sen. Diane Feinstein (D-CA), Sen. Chris Coons (D-DE), Sen. Angus King Jr. (I-ME), Sen. Mazie Hirono (D-HI), Sen. Tammy Duckworth (D-IL), Sen. Robert Casey Jr. (D-PA), Sen. Bill Nelson (D-FL), and Sen. Sherrod Brown (D-OH). This brings total co-sponsorship on the Cantwell-Hatch bill to 38 members of Congress, including 26 Democrats, ten Republicans and two Independents.
We urge all ACTION members to thank these members of Congress for co-sponsoring the Affordable Housing Credit Improvement Act.
Recent HUD and Freddie Mac Studies Examine Housing Credit Properties
HUD has released a new report highlighting the importance and impact of the Housing Credit. The report, Understanding Whom the LIHTC Program Serves: Data on Tenants in LIHTC Units as of December 31, 2015, documents that 44.5 percent of Housing Credit properties’ tenants were extremely low-income in 2015 – serving those earning 30 percent of area median income or less. The report also shows that the vacancy rate of Housing Credit properties dropped from 5 percent vacant to 4 percent vacant between 2013 and 2015, indicating high demand for these homes.
A recent analysis by Freddie Mac also found that households who live in Housing Credit properties benefit from more stable and predictable rent increases. The study indicates that the average rent for Housing Credit properties is 38 percent lower than average market-rate rents. Across the nine markets analyzed in the study between 2012 and 2017, market-rate rents in the nine markets grew 5 percent on average per year while Housing Credit properties’ rents rose an average of 0.9 percent annually. The study points out that the substantial market-rate rent increases are causing serious financial hardship, particularly for lower-income households that qualified for but were unable to move into Housing Credit units because too few were available.