Affordable Housing Bill Seeks to Remedy Consequences of Tax Cuts That Include Loss of Construction Related Jobs, Income and Tax Revenue
In late July 2018, U.S. Representatives James Clyburn (D-SC-6) and Suzan DelBene (D-WA-1) along with Congressman Donald Payne, Jr. and Congresswoman Bonnie Watson Coleman introduced the Restoring Tax Credits for Affordable Housing Act (H.R. 6542). In addition, U.S. Senator Cory Booker introduced the Housing, Opportunity, Mobility, and Equity (HOME) Act (S.3342) on August 1, 2018.
This new House affordable housing bill seeks to restore the Housing Credit’s production potential. After the Tax Cuts and Jobs Act of 2017 resulted in a reduction in the value of the Housing Credit, this proposed bill could be the remedy that unintended consequence.
According to accounting firm Novogradac and Company, a gap of an estimated 235,000 affordable rental homes will not be constructed over the next 10 years due to the reduced corporate tax rate.
The Low-Income Housing Tax Credit (Tax Credit) lowers the corporate tax rate from thirty five percent to twenty one percent and changes the inflation factor for future Tax Credit and private activity bond allocations.
The potential future and significant decrease in affordable housing production will also result in the loss of over 200,000 jobs and billions of dollars in business income. Federal, state, and local tax revenue across the United States will also be lost.
In addition, U.S. Senator Cory Booker (D-NJ) introduced the Housing, Opportunity, Mobility, and Equity (HOME) Act (S.3342) on August 1, 2018.
Booker’s proposed affordable houisng bill addresses:
- Zoning policies as well as increasing housing affordability.
- The bill will direct all jurisdictions receiving grants under the Community Development Block Grant (CDBG) program to establish new strategies to increase the supply of housing.
- Further, the proposed bill will ease zoning restrictions that currently prevent new development.
The overall goal of Booker’s bill is to ensure that at least 20 percent of all new units meet the affordability requirements.
The Restoring Tax Credits for Affordable Housing Act has been referred to the House Committee on Ways and Means.
Housing, Opportunity, Mobility, and Equity (HOME) Act has been referred to the Committee on Finance.
At the time, it is unclear whether or not the U.S. House or the Senate will consider either piece of legislation. Monarch Housing supports both bills.