Background
In April 2024, the leadership of the House Ways and Means Committee announced the creation of 10 Republican “tax teams” to craft policy proposals for Republican leadership to consider in the development of its platform for major tax action anticipated as early as next year, in advance of the expiration of temporary tax provisions put in place in the 2017 Tax Cuts and Jobs Act. Each tax team is comprised of Republican members of the Ways and Means Committee. One of these teams, the Community Development Tax Team, is considering tax policy related to affordable housing, including the Housing Credit and tax-exempt qualified private activity bonds such as Housing Bonds.
As part of this effort, the tax teams have solicited recommendations from the general public on what they should prioritize in their recommendations for the Republican tax platform. Details on how to submit letters with recommendations, which are due to the Committee by Tuesday, October 15, 2024, can be found here.
The ACTION Campaign encourages its grassroots members to take advantage of this opportunity by submitting comments to the Community Development Tax Team that support provisions of the Affordable Housing Credit Improvement Act (AHCIA; H.R. 3238). The Community Development Tax Team would like to receive unique comment letters from stakeholders; therefore, ACTION is not creating a template letter. Instead, we urge ACTION members to incorporate some of the points below in individual letters that also focus on how expanding and strengthening the Housing Credit through AHCIA provisions would help the local communities you serve. You also may want to draw on data from ACTION’s national, state, and district fact sheets or other materials in the ACTION Advocacy Toolkit, such as our issue-specific fact sheets that provide information on specific populations such as older Americans, veterans, Native Americans, persons with disabilities, rural areas, etc. Please share this request for input and these talking points with your allies and partners in the community so they can submit their own letters!
Housing Credit Talking Points
- The Low-Income Housing Tax Credit (Housing Credit) is the nation’s most successful tool for financing the creation and preservation of affordable housing. Without it, almost no affordable rental housing would be built, simply because costs are too high for owners to otherwise charge affordable rents.
- Since Congress created the program in 1986, through 2022, it has financed 3.85 million units of affordable housing across the nation.
- The Housing Credit has served nearly 9 million low-income households.
- The Housing Credit supports about 6.33 million jobs per year.
- The Housing Credit has generated over $257 billion in federal, state, and local tax revenue.
- The Housing Credit has generated over $716 billion in wages and business income.
- The Housing Credit is a uniquely successful program.
- It has a market-based structure where private sector investors bear all the risk, not the general taxpaying public. The IRS can recapture the tax credits from the investor if a property falls out of compliance with the program’s rules, so the investors have a strong incentive to ensure that each property remains in full compliance, including high standards of quality and restrictions on affordability. These powerful incentives have resulted in an extremely low rate of recapture due to noncompliance. Additionally, only 0.5 percent of all Housing Credit properties have undergone foreclosure, a better track record than every other class of real estate, including market-rate multifamily homes.
- The program is also administered mostly by the states. State Housing Finance Agencies (HFAs), which run the program, have a statewide perspective, know their local markets, are familiar with unique factors in their state’s economy, and have a deep understanding of other state rules and regulations that might impact the Housing Credit program.
- Despite the Housing Credit program’s success, demand for affordable housing continues to outstrip supply. The lack of supply has resulted in a severe affordable housing crisis that impacts every state and every district across the nation.
- Over 12 million renter households across the country pay more than half their monthly income on rent, leaving too little for other expenses such as healthcare, transportation, and nutritious food.
- In order to afford a one-bedroom apartment at the national average fair-market rent, a minimum-wage worker has to work 95 hours per week.
- There is no state or county in the US where a worker earning the prevailing state or local minimum wage can afford a modest, two-bedroom rental home at fair-market rent by working a traditional 40-hour workweek.
- There is a nationwide shortage of 7.3 million affordable and available rental homes for extremely low-income renter households.
- This crisis affects every geography: rural, suburban, and urban communities.
- High housing costs are a major driver of inflation. Asking rents for market-rate apartments are up almost 30% since the before the pandemic and shelter is a top contributor to monthly price increases, according to the Consumer Price Index.
- The Housing Credit program functionally received a cut at the end of 2021, when a 12.5 percent increase in the cap established in 2018 expired. This cut came at the worst possible time, as the economy was still recovering from the pandemic’s disruptions, construction costs were increasing due to inflation, and market-rate rents were reaching historic levels due to an imbalance between supply and demand.
- One bill in Congress can make a significant difference: the Affordable Housing Credit Improvement Act.
- The AHCIA’s provisions to expand the Housing Credit would finance the creation or preservation of nearly 2 million additional homes over the next decade.
- The AHCIA would enable the program to better serve hard-to-reach communities such as rural areas, Native Americans, extremely low-income households, and high-poverty areas.
- The AHCIA contains other provisions to strengthen, protect, and expand the Housing Credit program, including some that could save the government money.
- The AHCIA would provide stronger protections for survivors of human trafficking and domestic violence as well as veterans.
- The AHCIA has unanimous support from all parts of the housing industry: developers, investors, and tenant advocates back the bill and were involved in its crafting.
- The AHCIA has broad bipartisan support in Congress: as of July 1, 2024, it has 230 cosponsors in the House, including lead sponsors and 34 cosponsors in the Senate, including lead sponsors. Cosponsors in both chambers are evenly divided by party.
- The House version of the bill is cosponsored by more than half the House, and the Senate version by more than a third of the Senate. Combined, nearly half of Congress has cosponsored the AHCIA.
- Among its cosponsors are the chairs of 9 Senate committees, 10 House committees, and two joint committees.
- Also among its cosponsors are 10 members of House leadership and four members of Senate leadership, across both parties.
- The Housing Credit has had demonstrable positive effects beyond just housing.
- For kids, living in a Housing Credit home has been shown to increase their likelihood of attending college and increasing their future earnings.
- For homeowners nearby, the presence of Housing Credit properties actually raises the value of their homes.
- The presence of Housing Credit properties has been shown to decrease the number of ER visits for opioid overdoses. This has the added benefit of saving hospitals hundreds of millions of dollars per year.
- The presence of Housing Credit properties has been shown to decrease rates of child abuse and neglect.
- Living in a Housing Credit home has been shown to improve physical and mental health for both adults and children, including decreased rates of stress and depression, STIs, asthma and other respiratory illnesses, substance misuse, and more. For children, this improves their educational outcomes by boosting school attendance, focus, and grades. This also saves governments and other service providers money.
- The presence of Housing Credit properties has been shown to significantly reduce violent crime. This too saves governments and other service providers money.
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