Legislative State-of-Play
Tax Package with Housing Credit Provisions Introduced, Passed by Key Committee
On January 16, House Ways and Means Committee Chair Jason Smith (R-MO-08) introduced tax legislation reflecting the compromise he reached with Senate Finance Committee Chair Ron Wyden (D-OR). The bill, the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024), contains two key Housing Credit provisions, which are largely based on provisions from the AHCIA. The first would restore the 12.5 percent increase to the 9 Percent Credit that expired in 2021, retroactively expanding the credit for calendar year 2023 and applying the increase to 2024 and 2025. While Calendar Year 2023 is over, State Housing Credit agencies would still be able to use the additional 2023 authority in 2024 because states have two years to use annual authority before it is redistributed through the National Pool. The second provision would lower the 50 percent threshold for 4 Percent Credit properties financed with tax-exempt Private Activity Bonds to 30 percent. To qualify, buildings must be placed in service after December 31, 2023, and have bond financing from an issue with an issue date before 2026.
The tax package negotiations centered on balancing Democrats’ priority to expand the Child Tax Credit and Republicans’ priorities to restore three business tax credits from the Tax Cuts and Jobs Act of 2017 (TCJA). One of those business tax provisions, the temporary restoration of 100 percent bonus depreciation for certain qualified properties, will also benefit Housing Credit investors, particularly for investors in bond-financed 4 Percent Credit properties, for which tax losses are a larger component of investors’ overall yields than they are in 9 Percent Credit properties.
With demands from conservative lawmakers for any tax package to be paid for, negotiators found savings through the early phase-out of the Employee Retention Tax Credit, which has been subject to allegations of fraud. In addition to the Housing Credit, negotiators included a few other provisions in the $78 billion tax package to provide relief for communities recovering from certain recent disasters and for U.S. businesses with operations in Taiwan.
If enacted, this bill would represent the biggest single federal investment in affordable housing in decades. The Housing Credit provisions would finance the construction and preservation of an estimated 200,000 additional affordable rental homes nationwide; generate over $34 billion in wages and business income; support over 304,000 jobs; and generate almost $12 billion in federal, state, and local tax revenue.
On January 19, the Ways and Means Committee held a markup for the bill and passed it with overwhelming bipartisan support in a 40-3 vote. Throughout the hearing, the Housing Credit provisions received support from members of both parties. A few Democratic members of the committee lamented the absence of certain other AHCIA provisions. However, revenue constraints meant that other AHCIA provisions could not be included. ACTION will continue to press for their advancement in future tax bills.
During the markup, the AHCIA House lead, Rep. Darin LaHood (R-IL-16), submitted a letter into the Congressional Record signed by 88 national and statewide affordable housing and community development groups that was sent to the committee the day before the markup (after the letter was submitted, additional organizations signed on, bringing the total to over 90 organizations).
What's Next
On January 23, the bill was “noticed” on the House Clerk’s website, which is a necessary step for floor consideration. The Speaker is expected to bring it to the floor under suspension of the rules, bypassing the Rules Committee, and allowing the Speaker to limit debate and prevent amendments that could jeopardize the compromise. This procedure requires a two-thirds vote and five days’ notice, which means the bill could be voted on by the full House as early as January 30.
Assuming the House passes the bill, the direct path forward in the Senate remains unclear. Senate Majority Leader Chuck Schumer (D-NY) has endorsed the tax package and indicated that it must include the Housing Credit. As noted above, any amendments to that agreement could derail the bill. The next real opportunity for tax legislation will likely be in late 2025, when most of the TCJA provisions expire. Given the current housing crisis, Congress cannot afford to wait that long to act.
Learn more about the bill from the official technical summary, from Congress’ Joint Committee on Taxation’s (JCT) description of the tax package, and from JCT’s estimated revenue effects of the bill (known as its “score”).
National Governors Association Endorses Tax Package
On January 29, the National Governors Association (NGA) endorsed the tax package. Founded in 1908, it is a bipartisan organization representing the leaders of 55 states, territories, and commonwealths. In a press release, the NGA urged Congress to pass the bill as soon as possible, in part because of the Housing Credit provisions in the legislation.
What Can You Do to Support this Essential Expansion of Affordable Housing Resources?
It was a huge victory to have the Housing Credit included in H.R. 7024 given the relatively narrow scope of the legislation — it is one of few bipartisan additions to the party-specific priorities that formed the core of the tax committee chairs’ deal. While ACTION took a broad approach to outreach in the lead up to the package’s introduction, we now encourage a more targeted approach.
Outreach to the House:
- All Democrats who are not members of the Ways and Means Committee.
- Republican AHCIA Cosponsors who are not on the Ways and Means Committee only.
Ask these House members to support the bill when the Speaker brings it to the floor. The strong support in the Ways and Means markup means that outreach to off-Committee Members of Congress is a better use of your time. We have the support we need from members on the Committee.
Outreach to the Senate:
- All Democrats, including Finance Committee members.
- Republicans who are AHCIA cosponsors and any other Republican who is supportive of affordable housing and who you think could be persuaded to vote for the bill.
Again, we are asking Senators to support the bill when the chamber takes it up for consideration, which we hope will happen soon.
We need housing advocates to keep up your advocacy by continuing to stress the need for these critical resources in the states and districts these Members of Congress represent. To assist advocates, ACTION created a webpage with links to templates and other materials for your outreach. Be sure also to include the support letter signed by the national and state coalitions of affordable housing and community development organizations. If you have any questions or need help contacting your Senators and Representatives, please don’t hesitate to email us.
Housing Credit Supported During House Financial Services Hearing
During a January 11 House Financial Services Committee hearing on HUD oversight, the Housing Credit and the AHCIA received positive coverage. Representative Jim Himes (D-CT-04) noted that the Housing Credit is the nation’s number one tool for financing affordable housing, highlighting the positive impact of a relatively new property in his district. Later, Rep. John Rose (R-TN-06) touted his cosponsorship of the AHCIA and asked Sec. Fudge – a former two-time AHCIA cosponsor herself when she served in the House – whether she supported its enactment. Secretary Fudge reiterated her belief that Congress should pass it.
Housing Credit Supported During Joint Economic Committee Hearing
During a January 17 Joint Economic Committee hearing on increasing the supply of affordable housing, several committee members, including its chair, Sen. Martin Heinrich (D-NM), expressed support for the Housing Credit, the AHCIA, and the related provisions in the tax package currently moving through Congress. While a couple of the witnesses offered critiques of the program, others expressed their support. One committee member, Rep. Katie Porter (D-CA-47), said she would like to see the AHCIA in its entirety move forward, given its overwhelming bipartisan support.
January AHCIA Cosponsorship Update
The AHCIA currently has over 45 percent of Congress cosponsoring, with supporters evenly divided by Republicans and Democrats. In the House, there were ten new cosponsors this past month, bringing the total number of cosponsors to 212.
- Elise Stefanik (R-NY-21), January 5
- Ami Bera (D-CA-06), January 5
- Brandon Williams (R-NY-22), January 5
- Greg Landsman (D-OH-01), January 5
- John Rutherford (R-FL-05), January 10
- Joe Neguse (D-CO-02), January 10
- Maria Elvira Salazar (R-FL-27), January 17
- Jake Auchincloss (D-MA-04), January 17
- John Curtis (R-UT-03), January 17
- Henry Cuellar (D-TX-28), January 17
We have a goal of reaching 218 House cosponsors, a simple majority of the House, as soon as possible. Help us meet it by reaching out to Members of your delegation who are not yet on the bill and following up with those you’ve already connected with to get them over the finish line.
Cosponsorship of the Senate version of AHCIA stands at 30 Senators, split evenly between both parties.
As of this writing, there are also 24 Senators and 15 House Democrats in the queue as we wait for more Republicans to cosponsor so that we can maintain party parity.
AHCIA Advocacy Resources
The ACTION Campaign has a number of advocacy materials to help support your outreach, including updated National, State, and Congressional District Fact Sheets, our video series detailing the provisions of the AHCIA of 2023, updated statewide ACTION Campaign member lists, an in-district advocacy guide, sample emails for outreach, as well as detailed information about the legislation in our Advocacy Toolkit. We also have a complete list of cosponsors from last Congress, where you can check if your Senators or Representative have cosponsored in the past, as well as the most up-to-date list of current cosponsors.
Administration Updates
HUD Publishes Income Limit Methodology Changes
On January 10, HUD published a notice in the Federal Register that would change the methodology it uses to calculate income limits for various affordable housing programs like Section 8 and the Housing Credit, applicable to Fiscal Year 2024 (FY24) and future years.
Since FY10, HUD has capped the annual increase at the greater of five percent or two times the annual percentage change in national median family income and allowed a decrease of no more than five percent. Moreover, during the time period between FY10 and FY23, HUD modified the way it calculated the national median family income several times to address volatility caused by inflation.
For FY24 and thereafter, HUD proposes to modify the increase methodology by establishing “an absolute cap” of 10 percent. Furthermore, it proposes establishing a formal definition of national median family income to maintain consistency year-over-year in its calculations and allow it to better understand trends in median family income data. Interested parties may submit comments to HUD by February 8.
Housing Stakeholders Weigh in on Basel III Endgame
The comment period established by the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation for the banking regulators’ joint proposed rule colloquially known as the Basel III Endgame ended on January 16. The proposed rule would update federal regulations on banks’ liquidity requirements, stress testing, and capital adequacy under the international Basel Accords, which regulates the global financial system. While the proposed rule does not seek to change the equity risk weighting for the Housing Credit, which is currently at 100 percent, many affordable housing and community development organizations, including groups serving on the ACTION Campaign Steering Committee, submitted comments requesting that the regulators lower the risk weighting for the Housing Credit to 50 percent. Doing so would allow for a more accurate reflection of the risks of investing in the Housing Credit, thereby incentivizing greater investment in affordable housing. View the letter signed by several ACTION Campaign members.
ACTION Membership
In January, the ACTION Campaign welcomed nine new members to the coalition. Please join us in welcoming the following new members:
- Arka Consulting, LLC, Puerto Rico
- Loving Recreational Care, Minnesota
- Phipps Houses, New York
- RiseBoro Community Partnership, New York
- Samaritan Care Partners of Oregon, Oregon
- Bridge Meadows, Oregon
- City of Mountain View, California
- National Women’s Shelter Network, Florida
- Ozone Capital, LLC, Massachusetts
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
- A 2023 graduate thesis from UCLA examines the physical and administrative characteristics of Housing Credit properties, especially in communities of high opportunity. This appears to be the first analysis that does so, as well as one of the few that differentiates between 9 Percent and 4 Percent Credit properties. (The thesis was published last summer, but was embargoed until December.)
- A December 27 Notes from Novogradac article does a deep-dive analysis of a new estimate from JCT of several major individual and corporate tax expenditures for FY23-FY27, demonstrating that the societal benefits of housing and community development tax credits, including the Housing Credit, far outweigh their financial costs.
- A January 2 Notes from Novogradac article examines the FHFA’s increasing of the GSEs’ Housing Credit investment cap.
- Harvard’s Joint Center for Housing Studies recently published its America’s Rental Housing 2024 report, which analyzes the entire landscape of rental housing in the US. It finds that while Housing Credit properties have the highest occupancy numbers among federal affordable housing programs, over 325,000 Housing Credit properties nationwide are predicted to have their affordability requirements expire between 2024-2029. A similar report published in December by the Mid-America Regional Council notes that more than 10,000 Housing Credit units across the greater Kansas City region are anticipated to have their affordability requirements expire within the next decade.
- A forthcoming (March 2024) study to be published in the Journal of Substance Use and Addiction Treatment finds that states with greater rates of Housing Credit units experience lower rates of opioid overdoses treated in ERs. The study finds that, from 2005-2014, states with less than 28 Housing Credit units per 100,000 residents experienced an average of 26.5 ER visits to treat opioid overdoses per 100,000 residents, while states with at least 28 Housing Credit units per 100,000 residents experienced only 21.1 opioid overdose ER visits per 100,000 residents. The study will argue that greater availability of affordable Housing Credit units supports housing stability for low-income tenants and thus reduce the likelihood of substance misuse and overdose risk.
Housing Credit in the News
- A January 3 op-ed in The Hill and the Rochelle News-Leader by AHCIA House leads Reps. Darin LaHood (R-IL-16) and Suzan DelBene (D-WA-01) urges Congress to pass the AHCIA.
- Three January 4 articles from DS News note that the AHCIA had reached 200 cosponsors in the House.
- January 16 articles in the New York Times, Punchbowl News, and Affordable Housing Finance cover the announcement of the tax package, as does a January 17 article in MarketWatch.
- A January 16 policy statement from the American Heart Association endorses maintaining and expanding the Housing Credit as a tool to reduce health disparities historically driven by structural racism.
- A January 17 article in the Everett Post details the projected impacts that the Housing Credit provisions in the tax package could have across Washington state.
- A January 19 article in DS News and a January 22 article in Bloomberg CityLab cover the AHCIA provisions in the tax package.
- A January 22 press release in GlobeNewswire announced that, in 2023, Freddie Mac made $883 million in Housing Credit equity investments. Freddie Mac also met or exceeded all of its 2023 affordable multifamily housing goals set by FHFA.
- A January 23 article from Louis Public Radio provides an interview with Ways and Means Chair Smith on the tax package, including its Housing Credit provisions.
- A January 23 article in DC News Now covers AHCIA cosponsor Rep. David Trone’s (D-MD-06) support of the Housing Credit.
- A January 24 article in Punchbowl News covers the progress of and path forward for the tax package.
- A January 24 article in Reuters covers the contents of the tax package.
- A January 26 editorial in the Southeast Missourian endorses the tax package, in part because of its Housing Credit provisions.
- A January policy brief from JPMorgan Chase’s PolicyCenter endorses the AHCIA as a solution to expand the supply of affordable housing.
