The Affordable Housing Credit Improvement Act, which seeks to expand the Low Income Housing Tax Credit Program, has been reintroduced in Congress this session as S. 1136 and H.R. 2573. The changes proposed in this legislation are estimated to increase the supply of affordable housing by over 2 million units over 2 years. While this bill is comprehensive, some of the key provisions include:
Lower the “50 percent test” bond financing threshold for 4 percent Housing Credit developments. The “4 percent” Housing Credit is available for developments that receive 50 percent or more of their financing from Private Activity Bonds, and such developments are responsible for roughly half of all Housing Credit developments. However, unexpected and increased project development costs due to delays caused by the pandemic are jeopardizing properties’ ability to assemble enough bond financing to meet the “50 percent test,” which puts their access to Housing Credit equity at risk. Lowering the 50 percent threshold would allow more developments to move forward despite these pandemic-related disruptions. It would also increase affordable housing production by allowing more developments to access 4 percent Housing Credits.
- Expand the 9 percent Housing Credit. The AHCIA of 2021 would increase the annual Housing Credit allocation authority by 50 percent, phased in over two years (25 percent in 2021 and 2022, plus an inflation adjustment in 2022). The current level of Housing Credit authority includes a temporary 12.5 percent cap increase in the baseline, enacted in 2018 and expiring at the end of 2021. This additional allocation would increase affordable rental housing production and preservation by 299,000 more homes over 2021-30 than we are able to finance under present law.
- Basis boosts to better serve hard-to-reach communities. The legislation includes provisions that would allow basis boosts for extremely low-income tenants, bond-financed Housing Credit properties, Difficult Development Areas, tribal areas, and rural communities. By allowing certain projects a “boost” on their eligible basis, would make more projects financially feasible for these harder-to-serve groups. It is estimated that together, the basis boosts in the AHCIA of 2021 would finance an estimated 222,000 affordable rental homes over 2021-2030. These enhancements to the Housing Credit would allow states to more effectively address the unique affordable housing needs in cities and towns across the country.
Since its introduction, S. 1136 has been ead twice and referred to the Committee on Finance. There has been no movement on H.R. 2573.
TAAHP supports this legislation and encourages members to engage in advocating for the AHCIA. Keep an eye out for a letter of support that you can send to your representatives as this bill begins to make progress in Congress.