Hoekman explains how Enterprise is adjusting to the impact of new tax reform on affordable housing
While strides have been made in the affordable housing sector over the last few years, the lack of supply and need for additional capital remain prevalent issues for the industry.
Enterprise Community Partners, one of the largest and most active nonprofits in the affordable housing sector, celebrated the retention of the Low-Income Housing Tax Credit (Housing Credit) in the new tax code.
“Fortunately, the final tax bill retained the Housing Credit program and the tax-exemption on private activity bonds. Tax-exempt bond financing is what enables about half of all affordable housing projects to be eligible for Housing Credits, so we were relieved to see the bond program retained in the final bill (after being proposed for elimination in the original House bill),” said Hoekman.
But the firm continues to address the acute need for affordable homes and promote the tools necessary to make such projects a reality.
“The affordable housing crisis is vast and growing. Before the tax reform, we began advocating for a 50 percent expansion of Housing Credit resources to make headway in meeting the need for decent, safe, affordable homes. In light of the decrease in affordable housing production we are now expecting as a result of tax reform and the lower corporate tax rate, expanding Housing Credit resources is needed even more now than before. And now that we have assurance that the Housing Credit will remain a permanent part of the tax code, it’s time to make common sense reforms to make the program more streamlined and flexible,” said Hoekman.
In a recent Multi-Housing News blog post, Enterprise discussed a new class of community investment vehicles created by a provision in the Tax Cuts and Jobs Act – the Opportunity Zone Program.
This provision is designed to incentivize long-term capital to invest in distressed communities by providing tax benefits on investments in opportunity funds. This is the first new community development tax incentive program since the Clinton Administration. However, the program still has to go through a formal rule-making process and will take a while before it’s set up.
Scott Hoekman, senior vice president & chief credit officer for subsidiary Enterprise Community Investment Inc., revealed to Multi-Housing News how practitioners like the nonprofit he works for intend to deal with the recent changes and what’s ahead for low-income housing projects in 2018.