House Tax Bill Would Decrease Affordable Housing

Legislation | November 06, 2017 | by Linda Couch

The House tax reform bill unveiled on November 2 would significantly decrease affordable housing production and preservation resources for older adults with low incomes.

On November 2, the House Ways and Means Committee released its tax reform bill, HR 1. The Tax Cuts and Jobs Act retains the Low Income Housing Tax credit but eliminates private activity bonds including Multifamily Housing Bonds, which allow bond-financed multifamily projects to access 4% Housing Credits. The elimination of the exemption for private activity bonds would effectively end the use of 4% credits.

“Over half of Housing Credit developments utilize tax-exempt bonds and 4% Housing Credits. Eliminating the tax exemption would eliminate these bond/4% transactions after 2017,” according to Enterprise Community Partners.

The House bill does not include any of the bi-partisan supported expansion and improvement provisions from the House and Senate Housing Credit bills, a big disappointment and a massive missed opportunity to expand the Housing Credit by 50% and help Housing Credits serve lower income households better.

The bill also lowers the corporate tax rate from 35% to 20% without any adjustments to counter the negative impact on Housing Credits this will have.

The House Ways and Means Committee will start consideration of a Chairman’s mark of the bill (i.e., perhaps with some variations on HR 1’s text) on Monday, November 6.

Anyone with any members on the Ways and Means Committee should reach out now to express concern about:

  1. the loss of Housing Bonds for preservation and production of affordable housing,
  2. the weakening of Housing Credits by lowering the corporate tax rate without any adjustments to protect the value of Housing Credits, and
  3. the missed opportunity to better serve lower income older adults with Housing Credits.

We expect the Senate tax bill to be unveiled the week of November 6.