Middle Income Tax Credit

Senator Wyden Formally Introduces Middle-Income Housing Tax Credit Legislation

Posted: 10/3/2016

On September 22, Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced S. 3384, the Middle Income Housing Tax Credit Act of 2016 after circulating a discussion draft of the legislation earlier that day. The bill as introduced is identical to the discussion draft, which NCSHA described in our September 22 blog post. NCSHA has not taken a position on the legislation.

Although Senator Wyden has formally introduced the bill, he still is seeking comments on it. Based on those comments, Senator Wyden may modify the bill before reintroducing it in the next Congress. Comments are due by December 21, and should be sent to [email protected]. To inform NCSHA’s comments, please send your feedback on the bill to NCSHA’s Jennifer Schwartz by December 1.

NAHB today commended Sen. Ron Wyden (D-Ore.) for introducing the Middle-Income Housing Tax Credit Act of 2016. The legislation builds on the successful Low-Income Housing Tax Credit by creating a new tax credit to spur the development of rental homes affordable to Americans with moderate incomes.

The new Middle-Income Housing Tax Credit (MIHTC) would allocate funds to states based on population. State housing authorities would then follow a competitive process to allocate the tax credits to developers for new construction or rehabilitation projects.

“Sen. Wyden’s plan would help spur the production of much-needed affordable rental housing for working American families,” said NAHB Chairman Ed Brady. “The new MIHTC would serve as a great complement to the Low-Income Housing Tax Credit, which represents the best of public-private partnerships and is the most successful tool for financing affordable housing.”

Under Wyden’s bill, rents in MIHTC properties must not exceed 30% of Area Median Gross Income (AMGI). While the Low-Income Housing Tax Credit caps the incomes of those in qualifying projects at 60% of AMGI, the MIHTC would allow households with incomes that fall between 60% and 100% of the AMGI.

In many urban areas, hard-working families struggle to find affordable housing. In a press statement, Wyden said a family of four earning between 60% and 100% of AMGI in Portland, Ore. would earn between $44,000 and $73,000. HUD provides multifamily tax subsidy and income limit documentation to compute AMGI figures for other areas of the country.

Many renters live in apartments that were built decades ago and are in need of updating.

“Sen. Wyden’s bill would help to revitalize this existing rental housing stock and to keep housing affordable and available for moderate-income households,” said Brady. “We urge the Senate to act quickly to advance this important housing bill.”

Download a one-page summary of the legislative proposal, a longer, section-by-section summary and legislative text.

For additional information, contact J.P. Delmore at 800-368-5242 x8412.

Ask Your Senators to Oppose the Middle Income Housing Tax Credit Act of 2016 and NOT Become a Cosponsor.

On September 22, Senator Ron Wyden (D-OR) introduced draft legislation to create a new tax credit to incentivize developers to build and preserve housing that is affordable to families earning the Area Median Income (AMI). Senator Wyden circulated a Dear Colleague letter, urging Senators to cosponsor his bill. The National Low Income Housing Coalition opposes this bill.

While we are pleased to have Senator Ron Wyden prioritizing solutions to the affordable housing crisis, his proposed Middle Income Housing Tax Credit program would be a misguided and wasteful use of federal resources. NLIHC strongly believes that any new federal housing resource should be targeted to serve those with the greatest, clearest needs—families with extremely low incomes. Instead, Senator Wyden’s bill would serve families who, the data show, do not face significant housing challenges.

NLIHC’s recent report found that just 2% of middle-income renters nationwide are severely cost burdened, compared with 75% of the poorest renters who pay more than half their income towards their rent. These households include seniors, people with disabilities and families with children who struggle to keep a roof over their heads.

TAKE ACTION

Contact Your Senators and ask them to oppose Senator Wyden’s draft legislation and NOT become a cosponsor. Tell them that Congress should increase affordable housing resources for those with the greatest needs, not higher-income families.

Sample Script:

“I am [title] of [organization] based in [city, state]. Senator Wyden recently introduced draft legislation to create a new tax credit program to incentivize developers to build housing for families who earn the median income. I am calling to encourage the Senator to oppose this legislation and NOT become a cosponsor.

While we are pleased to have Senator Ron Wyden prioritizing solutions to the affordable housing crisis, his proposed Middle Income Housing Tax Credit program would be a misguided and wasteful use of federal resources. We strongly believe that any new federal housing program should be aimed to helping those families with the greatest needs—extremely low-income families. Instead, Senator Wyden’s bill would serve families who, the data show, do not face significant housing challenges. Just 2% of middle-income renters nationwide are severely cost burdened, compared with 75% of the poorest renters who pay more than half their income towards their rent.

There is overwhelming evidence that the need for affordable housing is primarily concentrated among extremely low-income families in our state and across the nation. Please oppose the Wyden bill and help ensure that critical resources go to those with the greatest needs. Thank you.”

To contact your Senators’ offices by phone, call the Capitol switchboard at 202-224-3121 or go to NLIHC’s website at http://nlihc.org and enter your zip code in the “Contact Congress” box at the bottom right of the screen.

To read NLIHC’s statement in opposition to the Middle Income Housing Tax Credit Act of 2016, see:http://nlihc.org/press/releases/7163

Questions or comments, please email [email protected]

Thank you for your support.

WASHINGTON—Sept. 22, 2016—Senate Finance Committee Ranking Member Ron Wyden, D-Ore., today released draft legislation that would create a tax credit for the development of rental homes affordable for families with incomes that fall between 60 percent and 100 percent of the area median gross income (AMGI). The proposed middle-income housing tax credit (MIHTC) would work in conjunction with the low-income housing tax credit (LIHTC), which provides housing for residents earning 60 percent and less of the AMGI. As currently envisioned, a state’s unused MIHTC dollars would be returned to the existing pool of funding for LIHTC. Wyden invited comments on the draft legislation; responses may be incorporated into legislation that Wyden will introduce.

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NAHB Commends Sen. Wyden’s New Middle-Income Housing Tax Credit

WASHINGTON, Sept. 22 – The National Association of Home Builders (NAHB) today commended Sen. Ron Wyden (D-Ore.) for introducing the Middle-Income Housing Tax Credit Act of 2016. The legislation builds on the successful Low-Income Housing Tax Credit (LIHTC) by creating a new tax credit to spur the development of rental homes affordable to Americans with moderate incomes.

The new Middle-Income Housing Tax Credit (MIHTC) would allocate funds to states based on population. State housing authorities would then follow a competitive process to allocate the tax credits to developers for new construction or rehabilitation projects.

“Sen. Wyden’s plan would help spur the production of much-needed affordable rental housing for working American families,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “The new MIHTC would serve as a great complement to the Low-Income Housing Tax Credit, which represents the best of public-private partnerships and is the most successful tool for financing affordable housing.”

Under Wyden’s bill, rents in MIHTC properties must not exceed 30 percent of Area Median Gross Income (AMGI). While the Low-Income Housing Tax Credit caps the incomes of those in qualifying projects at 60 percent of AMGI, the MIHTC would allow households with incomes that fall between 60 and 100 percent of the AMGI.

In many urban areas, hardworking families struggle to find affordable housing. In a press statement, Wyden said a family of four earning between 60 and 100 percent of AMGI in Portland, Ore., would earn between $44,000 and $73,000. AMGI figures for other areas of the country can be found here (https://www.huduser.gov/portal/datasets/il/il16/index_mtsp.html) and here (https://www.huduser.gov/portal/datasets/il/il16/index_il2016.html).

Many renters live in apartments that were built decades ago and are in need of updating.

“Sen. Wyden’s bill would help to revitalize this existing rental housing stock and keep housing affordable and available for moderate-income households,” said Brady. “We urge the Senate to act quickly to advance this important housing bill.”

A one-page summary of the legislative proposal can be found here (http://www.finance.senate.gov/imo/media/doc/MIHTC%20One%20Pager%20FINAL.pdf). A longer, section-by-section summary can be found here (http://www.finance.senate.gov/imo/media/doc/MIHTC%20Section-by-Section%20FINAL.pdf) and legislative text can be found here (http://www.finance.senate.gov/imo/media/doc/Wyden_MIHTC_LegText_(MCG16411).pdf).

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ABOUT NAHB: The National Association of Home Builders is a Washington-based trade association representing more than 140,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. NAHB is affiliated with 700 state and local home builders associations around the country. NAHB’s builder members will construct about 80 percent of the new housing units projected for this year.

Senator Wyden Releases Draft Legislation to Enact Middle-Income Housing Tax Credit Program

Posted: 9/22/2016

On September 22, Senate Finance Committee Ranking Member Ron Wyden (D-OR) released a discussion draft of legislation that would create a new tax credit program to stimulate the development of rental housing for middle-income households earning up to 100 percent of area median income (AMI). The legislation would create a new section of the tax code for the new program, which would be modeled after the Low Income Housing Tax Credit (Housing Credit) and administered by state agencies.

The proposal envisions a state middle-income credit cap of $1 per capita with a small state minimum of $1.14 million, adjusted for inflation in future years. Any middle-income credit authority unused after the first year in which it is received by the state would be carried over into the Housing Credit program for use in developing low-income rental housing.

The program would provide a 50 percent present value credit for qualified middle-income properties, with a minimum 5 percent credit rate. Federally financed properties, including those financed with multifamily Housing Bonds, would not be eligible to receive middle-income credits.

Like the Housing Credit, the middle-income credit would require a 15 year compliance period and a 15 year extended use period, for a minimum 30 year total affordability period. However, unlike the Housing Credit, in which the credit period during which investors receive tax credits is 10 years, the middle-income credit’s credit period would be 15 years, in line with the compliance period.

The draft legislation would require states to develop a separate qualified allocation plan (QAP) for the middle-income credit. States would need to give preference to projects that serve qualified tenants for the longest periods, in areas where rents are unaffordable to median income households, targeted to households with incomes ranging from 60 to 100 percent of AMI, and located near transit hubs. The selection criteria that states would need to include in the middle-income credit QAP mirror those in the Housing Credit statute, with the exception that the bill does not require states to consider public housing waiting lists as a criteria.

Senator Wyden has released a one-page summary of the discussion draft and a slightly more detailed four-page overview of the proposal.

Senator Wyden is seeking comments on the discussion draft by December 21. In particular, he has requested feedback on whether the credit period under the middle-income credit should be set at 10 years as it is with the Housing Credit, how to coordinate the middle-income credit with the Housing Credit, whether the bill should be modified to allow the middle-income credit to be used with federal financing, whether a 50 percent present value credit is sufficient to finance middle-income housing, the proposed income targeting, and whether Congress should amend the Community Reinvestment Act to allow financial institutions to get CRA credit for investments aimed at housing persons with incomes in excess of 80 percent of AMI.

Please send your feedback on the discussion draft to NCSHA’s Jennifer Schwartz by December 1 to help inform NCSHA’s comments.

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We wanted to bring to your attention draft legislation released today by Senate Finance Committee Ranking Member Ron Wyden (D-OR) that would create a new tax credit for the development of rental homes affordable to Americans with moderate incomes. Senator Wyden, a strong champion of the Low-Income Housing Tax Credit (LIHTC), envisions the new credit as working hand-in-hand with the LIHTC.

Below is the press announcement on the draft legislation with links to the legislative text and summaries. Senator Wyden has asked for comments on the proposal which can be submitted to [email protected].

Contact: Ryan Carey (202) 224-4515
September 22, 2016

WYDEN PROPOSES NEW MIDDLE-INCOME HOUSING TAX CREDIT

Designed to Complement the Successful Low-Income Housing Tax Credit, New Program Will Spur Development of Affordable Rental Housing for Middle-Income Americans

WASHINGTON -With the cost of housing squeezing family budgets across the country, Senate Finance Committee Ranking Member Ron Wyden, D-Ore., today released draft legislation that would create a new tax credit to spur the development of rental homes affordable to Americans with moderate incomes. The new incentive, called the Middle-Income Housing Tax Credit (MIHTC) is carefully designed to work in conjunction with the Low-Income Housing Tax Credit (LIHTC), a popular existing program that has helped to finance the construction of nearly three million affordable rental units since its creation in 1986.

“Many people across Oregon know what it’s like to see rents climb skyward beyond their ability to pay. When every penny goes into the rent check on the first of the month, you can’t even dream of saving for a down payment on a first home, paying for college or building a nest egg for retirement. In my state and nationwide, affordable housing is key to climbing the ladder of economic mobility,” SenatorWyden said. “The bottom line; America’s housing policy needs a remodel. It should start by using proven tools to develop new homes for Americans earning low and moderate incomes. This new tax credit will work hand-in-hand with the tax credit for low-income housing, which has been a huge success for decades.”

Building on the successful LIHTC model, the new credit would allocate funds to states based on population. State housing authorities would then follow a competitive process to allocate the tax credits to developers for individual projects, either new construction or rehabilitations.

In order to fit the new MIHTC program to the different needs of cities around the country, the qualification standards for MIHTC would be tailored to local economies and incomes. Tenants’ rents in the MIHTC properties must not exceed 30 percent of Area Median Gross Income (AMGI), a figure calculated by the Department of Housing and Urban Development that takes local economic factors into account. Furthermore, MIHTC would require at least 60 percent of a property’s units to be occupied by individuals or families with incomes that fall between 60 and 100 percent of AMGI. That would align the new middle-income credit with LIHTC, which caps the incomes of those in qualifying projects at 60 percent of AMGI.

In Portland, Oregon, a family of four between 60 and 100 percent of AMGI would earn between $44,000 and $73,000. AMGI figures for other areas of the country can be found here and here.

In order to help guarantee that the MIHTC program does not detract from investment in low-income housing, a state’s unused MIHTC dollars would be returned to the existing pool of funding for LIHTC. Senator Wyden is also a cosponsor of the Affordable Housing Credit Improvement Act, bipartisan legislation that would expand LIHTC.

The MIHTC discussion draft is a detailed legislative proposal, but it is not final. It is being circulated to stakeholders, members of Congress, federal officials and others for review and comment. The responses will be reviewed and, if appropriate, incorporated into legislation. Please submit comments on the proposal to [email protected].

A one-page summary of the legislative proposal can be found here. A longer, section-by-section summary can be found here and legislative text can be found here.

The National Council of State Housing Agencies, known as NCSHA, is a national nonprofit, nonpartisan association that advocates on behalf of HFAs before Congress and the Administration for affordable housing resources. It represents the HFAs of the 50 states, the District of Columbia, New York City, Puerto Rico, and the U.S. Virgin Islands. Visit us on the web at ncsha.org .

Alert

NAHB Commends Sen. Wyden’s New Middle-Income Housing Tax Credit

The National Association of Home Builders (NAHB) today commended Sen. Ron Wyden (D-Ore.) for introducing the Middle-Income Housing Tax Credit Act of 2016. The legislation builds on the successful Low-Income Housing Tax Credit (LIHTC) by creating a new tax credit to spur the development of rental homes affordable to Americans with moderate incomes.
The new Middle-Income Housing Tax Credit (MIHTC) would allocate funds to states based on population. State housing authorities would then follow a competitive process to allocate the tax credits to developers for new construction or rehabilitation projects.
“Sen. Wyden’s plan would help spur the production of much-needed affordable rental housing for working American families,” said NAHB Chairman Ed Brady, a residential builder and developer from Bloomington, Ill. “The new MIHTC would serve as a great complement to the Low-Income Housing Tax Credit, which represents the best of public-private partnerships and is the most successful tool for financing affordable housing.”
Under Wyden’s bill, rents in MIHTC properties must not exceed 30% of Area Median Gross Income (AMGI). While the Low-Income Housing Tax Credit caps the incomes of those in qualifying projects at 60% of AMGI, the MIHTC would allow households with incomes that fall between 60% and 100% of the AMGI.
In many urban areas, hardworking families struggle to find affordable housing. In a press statement, Wyden said a family of four earning between 60% and 100% of AMGI in Portland, Ore. would earn between $44,000 and $73,000. AMGI figures for other areas of the country can be found here and here.Many renters live in apartments that were built decades ago and are in need of updating. “Sen. Wyden’s bill would help to revitalize this existing rental housing stock and to keep housing affordable and available for moderate-income households,” said Brady. “We urge the Senate to act quickly to advance this important housing bill.”
A one-page summary of the legislative proposal can be found here. A longer, section-by-section summary can be found here and legislative text can be found here.