Cantwell and Hatch Introduce Comprehensive Housing Credit Legislation
Senator Maria Cantwell (D-WA) and Finance Committee Chairman Orrin Hatch (R-UT) on July 14 introduced S.3237, the Affordable Housing Credit Improvement Act of 2016. This comprehensive bill builds on Housing Credit legislation the two Senators introduced together in May, S.2962 (also titled the Affordable Housing Credit Improvement Act of 2016).
The new bill includes the three provisions also contained in S.2962—a 50 percent increase in Housing Credit authority, minimum 4 percent rates for both acquisition and bond-financed properties, and an income averaging option—plus a host of additional programmatic changes intended to help the program reach more people and places and streamline its administration.
S.3237 contains nearly all of NCSHA’s Housing Credit-related legislative priorities and additional program modifications on which NCSHA has worked with other ACTION Campaign members over the last year. It also includes additional changes that Senators Cantwell and Hatch are pursuing based on feedback they have received from other groups independently of NCSHA’s and the Campaign’s efforts but on which they have sought NCSHA’s views.
Specifically, the new bill would:
• Provide a 50 percent increase in Credit authority phased in over five years, and a corresponding phased-in 50 percent increase in the small state minimum (included in S.2962; an NCSHA legislative priority);
• Permit income-averaging within Housing Credit properties (included in S.2962; an NCSHA legislative priority);
• Establish a permanent minimum 4 percent Housing Credit rate for acquisition and bond-financed properties (included in S.2962; an NCSHA legislative priority);
• Standardize income eligibility for rural properties (an NCSHA legislative priority);
• Establish a state-determined 30 percent basis boost for bond-financed properties (an NCSHA legislative priority);
• Provide flexibility around existing tenant income eligibility when the Credit is used to preserve older Housing Credit or other federally, state, or locally financed affordable housing;
• Simplify the Housing Credit student rule;
• Give states the flexibility to determine a reasonable replacement period after a casualty loss, during which time an owner would not be penalized by loss of Credits or recapture;
• Replace the right of first refusal with a purchase option, so that project sponsors can better ensure long-term affordability;
• Modify the 10-year rule to support preservation of properties in need of rehabilitation;
• Allow states to include relocation expenses in Credit-eligible rehabilitation expenditures;
• Repeal the Qualified Census Tract population cap;
• Specify that states have the authority to determine what constitutes a concerted community revitalization plan;
• Encourage the development of affordable housing in Native American communities by creating a selection criteria for Indian housing and treating qualified Indian housing developments as Difficult Development Areas;
• Change the name of the program to the Affordable Housing Tax Credit;
• Give states the flexibility to provide a basis boost of up to 50 percent for units reserved for extremely low-income (ELI) households in buildings in which at least 20 percent of units are reserved for ELI households;
• Limit the rent charged on units benefiting from either income averaging or the 50 percent ELI basis boost (provided by the bill) to the maximum Housing Credit rents, even if a tenant is a Housing Choice Voucher holder and the Fair Market Rent exceeds the Housing Credit rent limit for their unit (this provision does not apply to project-based rental assistance);
• Prohibit states from requiring or providing points for local approval or local contributions as part of project selection; and
• Eliminate the basis reduction associated with certain energy efficiency tax credits.
Senator Cantwell’s staff have encouraged NCSHA and our partners to continue to focus our advocacy work on increasing cosponsorship of S.2962, the original bill. However, they have also told us that Senator Cantwell intends to encourage all S.2962 cosponsors to also cosponsor S.3237. A press release Senator Cantwell’s office issued about the newly introduced bill is linked here.
Please contact NCSHA’s Jennifer Schwartz with questions.