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March 2023 Monthly Newsletter: Legislative Updates & Other Housing Credit News

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Legislative State-of-Play

While the lead sponsors of the Affordable Housing Credit Improvement Act (AHCIA) have not yet reintroduced the bill, behind-the-scenes discussions about reintroduction have begun. After an extensive process, during which ACTION sought input from its grassroots members regarding possible modifications to the AHCIA, the Steering Committee sent a letter this month to our congressional champions with a set of proposals. These included both technical and more substantive proposals to modify existing provisions and ideas for new programmatic changes for their consideration.

The bar for substantial changes to the legislation is likely to be high, as it will be easier for returning members of Congress who cosponsored in the 117th Congress to get on board again quickly with fewer changes. However, ACTION identified a number of new ideas that had unanimous support from the Steering Committee to put before the bill’s sponsors. They are currently considering whether – and if so, how – to adjust the legislation.

The proposals in ACTION’s letter would modify the bill to remove aspects enacted last year in the Inflation Reduction Act; clarify the intent of or expand on certain existing provisions of the bill; improve data transparency; and respond to new and evolving challenges, such as development delays, preservation needs, and tenant protections.

The ACTION Campaign Steering Committee thanks all members who contributed to this process.

While we wait for the AHCIA to be introduced, ACTION urges its members to take proactive measures, including inviting Members of Congress to tour a property or come to a ribbon cutting. The relationships you make now will help you when it comes time to ask Members to cosponsor the bill, and the best way to achieve support for the program is to show them the difference the Housing Credit makes by bringing them to a property. ACTION recently updated all state and district fact sheets, which you can use for your advocacy efforts. More materials will be available when our champions on the Hill reintroduce the bill.

Urgency of Passing AHCIA Raised in Banking Committee Hearing

On February 9, the Senate Committee on Banking, Housing and Urban Affairs held a hearing on the current state of housing. ACTION Campaign members the National Association of Home Builders and the Housing Assistance Council testified at the hearing about affordability and supply chain challenges impacting communities across the country. Witnesses stressed the urgency of increasing the housing supply via multiple methods, including by passing the AHCIA. The committee’s leaders, Chair Sherrod Brown (D-OH) and Ranking Member Tim Scott (R-SC), expressed their desire to collaborate to identify and advance bipartisan solutions. Senator Brown cosponsored the AHCIA in the previous three Congresses, and Sen. Scott cosponsored it in the 115th Congress.

Administration Updates

Treasury Announces OECD Guidance on Global Minimum Tax

On February 2, the U.S. Department of the Treasury announced that the Organization for Economic Cooperation and Development (OECD) released administrative guidance for implementing the second portion of a 15 percent global minimum tax (GMT) on multinational businesses, known as Pillar II. The Treasury’s announcement explicitly notes that the Housing Credit will be protected from the GMT. According to a preliminary analysis of the guidance by ACTION Steering Committee Member Novogradac, investments in community development incentive programs, including the Housing Credit, that are accounted for using the equity method of accounting and are not consolidated will not negatively affect the calculation of whether the corporation has an effective tax rate of less than 15 percent.

Had these investments not been protected under the guidance, many international businesses that invest in these programs would likely have lost some or all of the accompanying tax benefits, which likely would have led them to cease investing in the programs and possibly sell most or all of their existing portfolio. This would have had a catastrophic effect nationwide.

The ACTION Campaign welcomes this guidance, which will help preserve multinational businesses’ appetite to invest in the Housing Credit. ACTION sent a letter in April 2022 to Treasury Secretary Yellen, urging her to work with the OECD to protect the Housing Credit and other critical community development tax incentives in the implementation of the GMT.

IRS, DOE, & Treasury Release Guidance on IRA Programs

On February 14, the IRS, Treasury, and Energy Departments released new information on key Inflation Reduction Act provisions intended to incentivize investment in underserved communities. The IRS issued a notice that establishes the Low-Income Communities Bonus Credit program. The new program will provide a boost of up to 20 percentage points to the investment tax credit for solar and wind energy projects in low-income communities. 

The notice defines qualified projects as eligible clean energy facilities that generate electricity solely from wind or solar energy and are either located in low-income communities or on Tribal land; serving federally subsidized residential buildings, including housing financed by the Housing Credit; or facilities where at least half of the financial benefits of the electricity produced go to households with incomes below 200 percent of the poverty line or below 80 percent of the AMI.

ACTION Membership

Help ACTION continue to grow our membership and advocacy strength by encouraging your networks to support affordable housing and the Housing Credit by joining the coalition. Membership is free. Together, we can demonstrate to Members of Congress the widespread support for the Housing Credit across the country. You can also help strengthen our reach by following the ACTION Campaign’s LinkedIn page and inviting your connections to follow and join us.

Housing Credit Research and Publications

  • A January 10 article in the Journal of General Internal Medicine examines the investments made by healthcare companies in the Housing Credit since the passage of the Affordable Care Act (Obamacare). In particular, it notes that the Housing Credit is an effective way to lower healthcare costs for patients through the provision of housing security, lower the operational costs of treatment of healthcare organizations, and also serves as an effective way for the healthcare organizations to comply with lesser-known provisions of Obamacare that require investment in community needs.
  • A January 25 research paper in Cityscape examines Housing Credit spillover effects in Los Angeles. It concludes that, despite misplaced suspicions by critics, the Housing Credit has positive spillover effects in the L.A. region, regardless of the characteristics of the neighborhoods and those of the properties themselves. Andrew Jakabovics, VP of Policy Development & Research at ACTION co-chair Enterprise Community Partners, was a coauthor.
  • A recent paper in Quality Management in Health Care analyzes Housing Credit investments by healthcare organizations in Utah to improve health outcomes for patients while enabling providers to comply with the Affordable Care Act. The paper notes that housing is a social determinant of health, and that these particular Housing Credit investments helped prevent thousands of affordable units in an increasingly expensive market from converting to market rate.

Housing Credit News Highlights

  • A February 2 article in the Novogradac Journal of Tax Credits explains the Available Unit Rule with the Average Income Test.
  • A February 10 report from Reuters notes that the Financial Accounting Standards Board (FASB), a private, non-governmental regulator, is expected to publish a new accounting standard that will expand existing methodology from only the Housing Credit to other tax credit programs. This is critical for companies that use multiple programs simultaneously, such as combining the Housing Credit with the New Markets Tax Credit for single projects.
  • A February 17 release from Treasury noted that Deputy Secretary Wally Adeyemo and HUD Deputy Secretary Adrianne Todman visited a Housing Credit property in Atlanta, Georgia, to witness the benefits of the Housing Credit and related programs firsthand. The ACTION Campaign provided the data about the Housing Credit’s impact nationwide and in Georgia for the press release.
  • A February 21 HUD blog post announced the completion of the first ever Housing Credit property that was also financed by a dedicated municipal bond. The Bulls Creek Apartments in Charleston, SC, was primarily funded by the Housing Credit, but also received a portion of its gap financing from a $20 million affordable housing bond issued by the City of Charleston, after voters there approved it in 2017.

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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