NCSHA Washington Report | December 16, 2022
Housers have to hope for a compromise between Democrats and Republicans in the next few days on legislation that includes the top tax priority of the moment for each — because otherwise Congress probably won’t act on a tax priority of long standing for both: expanding the Low Income Housing Tax Credit.
The White House and congressional Democrats for the most part want to increase the child tax credit along the lines Congress did temporarily during the pandemic, which lifted 2.9 million children out of poverty. Republicans want to extend the life of several business tax breaks, most notably the credit for research and development (R&D) expenses, which many companies say are essential for economic growth and competitiveness.
While each side seems to be playing into the media’s characterization of the situation as a “one-for-them, one-for-us” trade, they shouldn’t be. For one thing, a number of prominent Republicans have supported the child credit in the past. And leading Democrats back tax incentives for business investment. A compromise should be within reach. Without one, there may be no tax bill at all this year.
If so, the tax policy unambiguously backed by both sides — the Housing Credit — may miss the opportunity for a cost-effective expansion that would generate more than 1.5 million new affordable homes.
The Wall Street Journal’s op-ed page, expressing outrage at the terms of a child-credit-for-R&D trade for Republicans, says R&D “commands large bipartisan majorities.” To the editor: The House version of the Housing Credit expansion bill has almost twice as many cosponsors as the R&D bill — and more Republicans.
In fact, more than 200 House members, including more than three-quarters of the tax-writing Ways and Means Committee, support Housing Credit expansion. Thirty-six Senators, including half the Finance Committee, do as well.
There’s still time to call any of them and ask them to insist their leaders include Housing Credit resources in a year-end tax bill.
The message is simple: To deal directly with the inflation and affordability where both cut the deepest, now is the time to expand the Housing Credit. This bipartisan business tax incentive, which does a lot of good for low-income children, can act as the glue that cements a deal both sides can live with on the R&D and child credits.
And if such an agreement eludes the art of the possible at this time, Congress should pass Housing Credit expansion on its own.
Stockton Williams | Executive Director
Washington Report will return on January 6.
State HFA Emergency Housing Assistance
In This Issue
- NCSHA Welcomes New Members
- Tax Deal Remains Elusive as Congress Moves into Final Stretch of Negotiations
- Agreement Reached on FY23 Omnibus Spending Bill; Congress Clears Weeklong Continuing Resolution
- NCSHA Joins Novogradac LIHTC Working Group to Recommend Modifications to Average Income Test Reporting Guidance
- FHFA Finalizes New Fannie Mae, Freddie Mac Multifamily Housing Goals
- NCSHA in the News
- Looking Ahead
NCSHA Welcomes New Members
These organizations joined NCSHA as affiliate members in November and December: Altisource; Barker Scoggins Consulting LLC; Catholic Charities USA; Greater Washington Urban League; IEM; Milliman, Inc. If you work with a partner interested in becoming a member, please contact Phaedra Stoger.
Tax Deal Remains Elusive as Congress Moves into Final Stretch of Negotiations
Congress still has not clinched a deal to advance a set of tax priorities, but time remains for action. Tax legislation — if there is to be any — would need to move with the omnibus appropriations bill Congress is working to pass next week. That means the next few days are the last opportunity in this Congress to press House and Senate members to include our top tax priorities: 1) increasing Housing Credit authority as much as possible — at a minimum by reinstating the 12.5 percent cut the program suffered in 2022; and 2) lowering the bond financing threshold from 50 to 25 percent so that states can finance more affordable rental housing with the 4 percent credit and their existing private activity bond volume cap amounts.
If you have not done so already, please call your members of Congress — particularly cosponsors of the Affordable Housing Credit Improvement Act and any others who have indicated support for the Housing Credit or affordable housing more broadly — and urge them to communicate their support for our priorities to their leadership. If you’ve made these calls already, thank you, and please follow up again with your members to ask them to weigh in one more time. If there was ever a time to be a squeaky wheel, it’s now. Email Deborah Yi if you need contact information for staff in your members’ offices. Contact Jennifer Schwartz if you need help with messaging.
Agreement Reached on FY23 Omnibus Spending Bill, Congress Clears Weeklong Continuing Resolution
Three of the so-called “four corners,” or chairs and ranking members of the House and Senate Appropriations Committees, announced Wednesday they had agreed on a “framework” for an omnibus spending package expected to pass both chambers and be signed into law before lawmakers leave town for the holidays. The announcement indicates agreement on top-line numbers for defense and non-defense discretionary categories of spending, launching the process for negotiating specific allocations for individual agencies and programs. Details about the agreement and funding levels for specific domestic programs are still unknown. Notably absent from the announcement was Congresswoman Kay Granger (R-TX), ranking member of the House Appropriations Committee, suggesting the deal would need to pass without House Republican support. Appropriators said Thursday they expect to release the details of the omnibus spending package Monday, December 19.
The House Wednesday and the Senate Thursday passed a short-term continuing resolution to keep government programs running until December 23 to give appropriators an additional week to work out the details of the omnibus legislation. The continuing resolution will now go to President Biden for his signature, which is expected before the current continuing resolution expires tonight.
NCSHA Joins Novogradac LIHTC Working Group to Recommend Modifications to Average Income Test Reporting Guidance
On December 12, NCSHA and the Novogradac LIHTC Working Group sent a joint letter to the Internal Revenue Service proposing technical alterations to the Average Income Test (AIT) record-keeping and reporting requirements, which IRS published as temporary regulations in early October with the final regulations on other aspects of AIT implementation. Our joint comments suggest a way to streamline the requirements for owners and state agencies and mitigate risk to investors. Specifically, the groups recommend simplifying the process by which the taxpayer must identify a qualified group of units for purposes of the AIT minimum set-aside and allow the taxpayer to perfect the qualified group of units if a mistake is discovered without requiring state action on a case-by-case basis to allow for such correction.
FHFA Finalizes New Fannie Mae, Freddie Mac Multifamily Housing Goals
The Federal Housing Finance Agency (FHFA) Wednesday published the final multifamily affordable housing goals for Fannie Mae and Freddie Mac for 2023 and 2024. Under a new goal-setting methodology, at least 61 percent of the rental units financed by loans each firm purchases must be affordable to low-income renters (those earning 80 percent of area median income or less), at least 12 percent must be affordable to very low-income renters (those earning 50 percent of AMI or less), and at least 2.5 percent must be affordable low-income units in small multifamily properties (between 5 to 50 units). The current affordable multifamily goals require a specific number of units financed by loans purchased by the firms be affordable. The final goal levels are nearly identical to those FHFA first proposed in August. The only change is a half percent increase in the small multifamily property subgoal. In NCSHA’s comments on the proposed goals, we expressed support for the new percentage-based goals system, while also asking FHFA to increase the proposed percentage thresholds.
NCSHA in the News
Affordable Housing Finance, 12.13.22, Multifamily Impact Council Names Inaugural Advisory Board
Route 50, 12.13.22, Why a Federal Funding Deal Matters So Much for States and Localities
Legislative and Regulatory Activities
- December 19 | Comments Due | Indexing Methodology for Title I Manufactured Home Loan Limits
- January 11 | Application Deadline | FY22 Choice Neighborhoods Planning and Implementation Grants
NCSHA, State HFA, and Industry Events
- January 8 – 13 | NCSHA’s HFA Institute 2023 | Washington, DC
- January 31 – February 1 | Affordable Housing Tax Credit Coalition 2023 Annual Meeting | Scottsdale, AZ
Jennifer Schwartz will speak at this event. - March 27 – 29 | Legislative Conference | Washington, DC
- June 13 – 16 | Housing Credit Connect & Marketplace | Seattle, WA
- October 14 – 17 | Annual Conference & Showplace | Boston, MA
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