Without Housing Bonds, NJ Would Lose 29,000 Rental Homes and 32,000 Jobs
On Friday, December 1, 2017, the Senate passed its version of the “Tax Cuts and Jobs Act” by a vote of 51 – 49. All Democrats voted against the bill, in addition to Senator Bob Corker (R-TN).
The Senate version of the bill retains the:
- Low Income Housing Tax Credit (Housing Credit) and
- private activity bonds, including multifamily Housing Bonds, which are essential for the production of roughly half of Housing Credit developments because they trigger the 4 percent Housing Credit.
For the low-income housing tax credit (LIHTC), the Senate bill includes an amendment from Sen. Pat Roberts, R-Kan., that would:
- Add veterans to the existing law exception to the general public use requirement, enabling developers to target their LIHTC developments to veterans.
- Automatically provide a 25 percent basis boost to 9 percent LIHTC developments located in rural areas as defined under section 520 of the Housing Act of 1949.
- For such rural properties, it would remove the current law discretion that state agencies have on providing a 30 percent basis boost.
According to the Joint Committee of Taxation, there is a slight cost to the rural housing provision, even though a state’s overall 9 percent LIHTC authority is unchanged. The amendment proposed to offset that cost by reducing the basis boost percentage for all properties from 30 to 25 percent, but it is anticipated that changes to the offset will be considered during a House-Senate conference.
The provisions of the Affordable Housing Credit Improvement Act of 2017 (AHCIA), co-sponsored by Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Sen. Maria Cantwell, D-Wash, previously added to the chairman’s mark of the bill were not included in the bill passed by the Senate, likely because they were found in violation of the Byrd Rule, which does not permit provisions without a revenue impact from being included in a budget reconciliation bill.
The next step is for the two chambers to reconcile the differences between their bills. The House is expected to vote to proceed to a conference on Monday evening. It is expected that negotiations will begin in earnest next week.
It is also still possible that the House will forego a conference and instead vote on the Senate-passed version of the bill. However, at this point indications are that they will seek to conference their bills.
The House version of the Tax Cuts and Jobs Act would retain the Housing Credit, but repeal private activity bonds, including multifamily Housing Bonds.
If Housing Bonds are repealed, roughly 800,000 affordable homes would not be built over the next decade, according to analysis from Novogradac & Company. New Jersey would lose 28,660 rental homes, 32,390 jobs, almost $3 billion in business income and over $1 billion in federal, state and local taxes.
Enterprise Community and the ACTION Campaign are committed to advocacy efforts to protect Housing Bonds as the House and Senate head to conference. The preservation of multifamily Housing Bonds, which face risk of elimination, is a priority.
It is critical that we reach out to New Jersey’s Republican Representatives and advocate that Housing Bonds be retained in the final tax reform bill.
ACTION members are asked to focus energy squarely on protecting tax-exempt multifamily Housing Bonds. Please keep up your calls to members of Congress, especially Republicans, to make sure they understand all that is at stake.
Make sure they are talking to their leadership and letting them know how important it is that they retain Housing Bonds in the final package.