WASHINGTON January 17th, 2024 – Two key provisions of the Affordable Housing Credit Improvement Act (AHCIA) have been included in a bipartisan tax agreement.
After intense Congressional negotiations, the agreement calls for a temporary restoration of a 12.5% allocation increase to LIHTC as well as a temporary reduction of the 50% bond test to 30% for 2024 and 2025.
The restoration of 12.5% increase in 9% LIHTC allocations for 2023 through 2025 and the reduction in the private-activity bond financing threshold to 30% in 2024 and 2025 would finance an additional 202,573 affordable rental homes, estimates Novogradac, an accounting and advisory firm.
If enacted, the tax bill would represent the largest increase in affordable rental housing resources since 2000, says Peter Lawrence, director of public policy and government relations at Novogradac.
If Congress were to extend these policies for a full 10 years, Novogradac estimates that an additional 912,610 affordable rental homes would be financed.
Sen. Maria Cantwell (D-Wash.), a lead sponsor of AHCIA, calls the move the “biggest investment in housing in 35 years.”
The LIHTC program enhancements were initially left out of the congressional plan a week ago but were added in the last several days.
“We would not be in this bill if not for Maria Cantwell,” says David Gasson, executive director of the Housing Advisory Group and a partner at MG Housing Strategies. “She went all out for this.”
The AHCIA (S. 1557 and H.R. 3238) built strong support in Congress over the last several months, with about 30 co-sponsors in the Senate and more than 200 in the House.
“One of the key talking points for us is that you cannot have an industry go out and get this strong of bipartisan support and then not be included in the bill,” Gasson says. “That resonated with leadership on both sides.”
House Ways and Means Committee chair Jason Smith (R-Mo.) and Senate Finance Committee chair Ron Wyden (D-Ore.) announced the bipartisan tax framework Jan. 16. They said the plan would be introduced as the Tax Relief for American Families and Workers Act of 2024.
It’s been a long road, but the short version is that advocacy works, says Emily Cadik, CEO of the Affordable Housing Tax Credit Coalition.
While the core pieces of the AHCIA are in the agreement, the fight is not over. The next step would be to find a legislative vehicle for a bill to gain full House and Senate approval.
The industry should be incredibly proud that the housing tax credit provisions have made it this far, but everyone’s help is still needed to get it across the finish line, Cadik says.
While two critical pieces of the AHCIA have moved forward, other important provisions, such as a boost to serve extremely low-income tenants, are not in the plan.
However, a major tax bill is expected next year because a number of provisions that were included in the Tax Cuts and Jobs Act of 2017 will be expiring. Advocates hope this will set up the affordable housing industry to get other AHCIA provisions passed as well as to extend the 12.5% allocation increase and the lower bond test.
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