Advocates for affordable housing are intensifying their efforts to push Congress’s House Committee on Ways and Means to advance essential legislation. Key measures being advocated include an expansion of Private Activity Bonds (PABs) aimed at bolstering initiatives focused on affordable housing. Colorado’s Emily Cadik, the CEO of the Affordable Housing Tax Credit Coalition (AHTC), recently expressed optimism regarding the potential for these much-needed reforms to be enacted during the upcoming lame duck session of Congress.
There is heightened urgency surrounding these proposals as the nation grapples with an affordable housing crisis that has reached critical levels in many states. The collective call for action aims to increase housing credit allocations and modify the bond financing thresholds that dictate the funding capabilities for vital housing developments.
The Affordable Housing Credit Improvement Act (AHCIA), which has lingered in Congress since its introduction in 2016, has now been revitalized with a fresh version reintroduced in May 2023. This bill suggests reducing the requisite bond financing threshold for securing Low-Income Housing Tax Credits (LIHTC) from 50% to 25%. If passed, this reduction would not only enhance the operational efficiency of tax-exempt bonds but also unlock significant new avenues of private financing necessary for affordable housing development.
The AHTC firmly argues that easing these financial constraints would enable individual states to utilize their bond volume caps more effectively, ultimately creating opportunities for a greater number of affordable housing projects. The current reality is stark: over half of U.S. states find themselves either fully using or exceeding their bond caps, stymieing progress toward adequate housing solutions.
The AHTC’s initiatives are not singular in nature; they align closely with the interests of the National Council of State Housing Agencies (NCSHA), which communicated their support for the AHCIA in a letter to the Ways and Means Committee. In addition to advocating for the reduction of the bond threshold, they propose removing caps on mortgage revenue bonds and multifamily housing bonds for a five-year grace period. This would enable municipalities to better meet the growing demand for affordable housing.
Both organizations stress the unfair inclusion of Housing Bonds within the PAB volume cap, highlighting that bonds for other private activities—such as those funding airports or hospitals—are exempt from similar restrictions. Such inconsistencies only serve to hinder the development of vital housing infrastructure needed across the nation.
The urgency of the current situation is buoyed by Vice President Kamala Harris’s vocal support for housing initiatives. Her priorities underscore the commitment at the highest levels of government to address the housing crisis, which may signal an inter-party consensus on the pathway forward for these housing initiatives. “Regardless of the outcome of the presidential election, the AHCIA seems positioned for potential advancements in Congress,” stated Jennifer Schwartz, director of tax and housing advocacy for NCSHA.
However, even if legislative efforts do not materialize during the lame duck session, prospects may still exist. The Tax Cuts and Jobs Act (TCJA), which is slated to expire at the end of 2025, provides a framework for potential reform of PABs. The provisions that may be extended could lead to significant tax legislation discussions—ones that could integrate substantial affordable housing tax reforms as part of broader economic measures.
Cadik reminds stakeholders that there is an imperative for cooperation: “With several trillion dollars in tax cuts due to expire, lawmakers from both parties must unite on tax legislation to avert significant across-the-board increases.” As the clock ticks down on these legislative opportunities, the need for a decisive solution becomes increasingly apparent.
The challenges surrounding affordable housing are multifaceted, yet the push for legislative reform represents a critical opportunity for meaningful progress. The concerted advocacy efforts from housing agencies, coupled with political will, suggest a landscape ripe for change. It requires a united front from lawmakers to address the pressing need for affordable housing through legislative reform that can directly combat the growing crisis. The time is now for Congress to embrace this challenge evidently, and to act decisively for the welfare of millions of Americans in need of secure and affordable homes.