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January 2023 Monthly Newsletter: Legislative Update & ACTION 2022 Year in Review

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Legislative Update & Current Advocacy Strategy

Housing Credit Not Included in Omnibus Appropriations Bill

Despite our best efforts and strong support in Congress for the Housing Credit, Congressional leaders were not able to negotiate a tax package acceptable to both parties for inclusion in the Fiscal Year 2023 (FY23) omnibus appropriations bill. Unfortunately, that means that the legislation enacted at the end of December does not include any tax policy other than separately-negotiated legislation related to retirement savings. As a result, even tax provisions that have wide bipartisan support, such as our Housing Credit priorities, were left out.

This is of course disappointing, but the omission of the Housing Credit provisions does not indicate a lack of support for the program in Congress. ACTION, allied housing advocates across the country, and in particular our Congressional champions fought incredibly hard for the two most critical supply-related provisions of the Affordable Housing Credit Improvement Act (AHCIA) to be included in the omnibus:

  • Restoring the 12.5 percent increase to Housing Credit authority that lapsed at the end of 2021 and increase the existing Housing Credit authority by 50 percent; and
  • Lowering the private activity bond (PAB) threshold from 50 percent to 25 percent.

Together, these two provisions would have enabled the construction and preservation of 1.93 million new affordable homes over the next decade according to estimates from ACTION Steering Committee member Novogradac.

Looking Ahead

While these priorities were unfortunately not included in the year-end bill, the significant bipartisan support for the Housing Credit provides us with a strong base to continue our efforts to expand and strengthen the Housing Credit in the 118th Congress, which begins today. Our first order of business will be to work with our congressional champions to reintroduce the bill early in the year and begin rebuilding support on the Hill through cosponsorship. As always, we are appreciative of your partnership and will look forward to working together to build support around reintroduction.

We are also looking forward to expanding ACTION’s scope of advocacy to new opportunities to advance priorities through the regulatory process. While ACTION has always been active on regulatory issues, the ACTION Steering Committee plans to formalize these efforts through a regulatory agenda. ACTION will solicit input from its members on this formal agenda, and we look forward to collaborating on this engagement.

2022 Year in Review

As we head into 2023, we wanted to pause and reflect on our advocacy over this past year and major events affecting our work:

The Cause of Affordable Housing Suffers a Terrible Loss | Sadly, we begin our year in review by honoring the legacy of a champion we tragically lost on August 3. Representative Jackie Walorski (R-IN), the Republican House lead of the AHCIA, was killed in a tragic car accident. The Congresswoman was a true champion of the Housing Credit, cosponsoring the AHCIA since it was first introduced in the 115th Congress and becoming the lead Republican sponsor of the bill in the 117th Congress. The Congresswoman worked tirelessly to expand and strengthen the Housing Credit, advocating for it with her fellow Republicans, in particular her peers on the House Ways and Means Committee.

ACTION Congressional Outreach | ACTION consistently advocated for the Housing Credit with congressional offices throughout 2022. With the help of our members and partners, ACTION engaged every House and Senate congressional office multiple times throughout the year via virtual and in-person meetings, phone calls, and email correspondence. In addition, we kept in regular contact with AHCIA cosponsors to advance Housing Credit priorities and held regular strategy meetings with AHCIA bill sponsors’ staff.

AHCIA Cosponsorship Progress | ACTION’s advocacy led to significant increases in the number of cosponsors of the AHCIA. At the start of 2022, the Senate version of the legislation, S. 1136, had 32 cosponsors and the House version of the legislation, H.R. 2573, had 133 cosponsors. By year’s end, S. 1136 had gained 12 cosponsors and H.R. 2573 had gained 75 cosponsors, bringing the final totals of cosponsors to 44 and 208, respectively. Both bills achieved strong bipartisan support, with the cosponsorship breakdown for S. 1136 at 11 Republicans and 33 Democrats and the breakdown for H.R. 2573 at 137 Democrats and 71 Republicans. Support for the legislation was also high on the tax-writing committees, with 50 percent of the Senate Finance Committee and 77 percent of the House Ways and Means Committee cosponsoring the legislation. Here is the final list of AHCIA cosponsors in the 117th Congress.

Letters on AHCIA | As Congress began to turn its attention to an end-of-year package, long thought to be the best chance for our Housing Credit priorities, ACTION organized a nationwide sign-on letter urging Congress to expand the reach of the Housing Credit before the end of the 117th Congress to increase housing production. The letter — signed by 2,545 national, state, and local organizations and businesses — focused on ACTION’s two major production priorities: increasing the Housing Credit volume cap and lowering the bond financing threshold. Meanwhile, with ACTION’s advocacy help, AHCIA House leads Representatives Suzan DelBene (D-WA) and Brad Wenstrup (R-OH) spearheaded a congressional sign-on letter to House Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy, also urging the inclusion of the AHCIA in end-of-year legislation. In total, 54 House members — split nearly evenly across parties — signed on.

Housing Credit Support from the Biden-Harris Administration | In 2022, ACTION successfully pressed for the Biden-Harris Administration’s support for the Housing Credit:

  • On March 28, the Administration released the President’s full FY 2023 budget request, which proposed allowing state Housing Credit Agencies the authority to allocate a basis boost to certain bond-financed developments receiving 4 percent Housing Credits. The White House estimated that this would have increased Housing Credit resources by approximately $10 billion over the next decade. This proposal is substantially similar to a provision in the AHCIA.
  • On May 16, the Administration released its Housing Supply Action Plan to increase the supply of affordable housing. The plan makes clear the fundamental and unparalleled role that the Housing Credit plays in the development of affordable rental housing. It calls for the financing of more than 800,000 additional affordable rental units by expanding the Housing Credit, including lowering the bond-financing threshold from 50 percent to 25 percent, increasing the annual Housing Credit allocation authority, and providing basis boosts for properties serving extremely low-income households and Native American communities. The Housing Supply Action Plan also committed the Administration to finalizing the Average Income Test (AIT) regulations and indicated that Fannie Mae and Freddie Mac would grow their equity investments in the Housing Credit.

ACTION Regulatory Advocacy & Updates | As ACTION pursued legislative efforts to strengthen and expand the Housing Credit, we also engaged with agency officials on regulatory enhancements to the program. Below are examples of this outreach, as well as additional updates. 

  • Global Minimum Tax. On April 5, ACTION joined 29 other organizations in sending a letter to Treasury Secretary Janet Yellen expressing concerns about the potential negative impact of the Global Minimum Tax (GMT) on the Housing Credit and related community development tax financing tools. The letter predicted that the GMT could disincentivize private investment in the Housing Credit, which would harm low-income communities and underserved populations across the nation.
  • IRS 2022-2023 Priority Guidance Plan. On June 3, ACTION sent a letter to the Internal Revenue Service (IRS) detailing recommendations to the IRS 2022-2023 Priority Guidance Plan. The letter called for the IRS to take several actions, including issuing final AIT regulations, extending COVID-19 relief, implementing Violence Against Women Act protections for Housing Credit tenants, allowing greater flexibility for properties suffering a casualty loss, including relocation expenses in rehabilitation expenditures, and restricting certain planned foreclosures.
  • Community Reinvestment Act Updates. On August 5, ACTION submitted comments to the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation on their efforts to modernize Community Reinvestment Act regulations. ACTION’s final comment letter includes recommendations to the banking regulators on ways to incentivize additional affordable housing development and preservation through the Housing Credit.
  • Average Income Test Updates. On October 12, the IRS released AIT final and temporary regulations and an accompanying proposed rule related to reporting and record keeping. The AIT originated as a provision in the AHCIA and was enacted separately in 2018. Numerous ACTION members engaged with the IRS and the Treasury Department on the implementation of the new minimum set-aside, advocating for significant changes to the regulations that the IRS initially published as a proposed rule in 2020. The final rule closely adhered to the recommendations made by ACTION members. More information is available in this explainer from Novogradac.

ACTION Member Engagement | The ACTION Campaign held regular meetings for members throughout 2022, including monthly updates via videoconference for any ACTION grassroots member that wanted to join. The ACTION Steering Committee continued to meet as necessary, and its two subcommittees, the Legislative Subcommittee and the Data and Research Subcommittee, met regularly. ACTION also published monthly newsletters for members and solicited recommendations for modifications to the AHCIA in 118th Congress from its grassroots membership.

ACTION Membership Growth | ACTION remains the largest coalition of Housing Credit advocates in the United States, with approximately 2,400 national, state, and local organizations and businesses signed on as members. In 2022, our coalition continued to grow, with the addition of 135 new members. In December of 2022, we welcomed the following businesses and organizations:

  • ECHO Housing Corporation, Indiana
  • San Diego Housing Commission, California
  • Sheehan Phinney Bass & Green PA, New Hampshire

Our grassroots membership is our strength, as it allows us to demonstrate to Members of Congress the widespread and growing support for the Housing Credit across the country. Please help us continue to grow by inviting your affordable housing partners who are not yet members to join ACTION. 

In addition, we are working to make sure we have the latest contact information for our members. If you would like to add or change a contact for your organization, please enter that information in this form and we will make sure it is updated for 2023. You can also use the form to share your social media accounts if you would like ACTION to follow and share content from your organization on the Housing Credit.

Thank You!

The ACTION Campaign would like to thank affordable housing advocates across the country – especially our members, partners, and Congressional champions – who joined in our efforts to strengthen and expand the Housing Credit throughout 2022. In 2023, ACTION will continue its work to strengthen and expand the Housing Credit. We look forward to advocating alongside you in the new year.

Max Brossy

Max Brossy is a tax policy analyst at Enterprise Community Partners. The ACTION Campaign is co-chaired by Enterprise and the National Council of State Housing Agencies.

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