The National Housing & Rehabilitation Association along with more than 30 other organizations have signed and sent to Congress a letter outlining four specific proposed changes to the low-income housing tax credit program and asking that they be included in the final economic stimulus bill that lawmakers are now crafting. The proposed changes are designed to make the housing credit more attractive to corporate investors and stimulate additional equity investment, and to provide gap funds to help stalled credit projects moved forward, creating jobs in the process. Among the other groups signing the letter were the Affordable Housing Tax Credit Coalition, National Council of State Housing Agencies, and National Association of Home Builders.
The four proposed changes call for:
- $5 billion in federal funds to be allocated through state housing credit agencies to fill financing gaps in developments that have credit awards but aren’t viable because they haven’t been able to raise any equity or sufficient equity.
- Allowing housing credit agencies to exchange a portion of their 2009 housing credits for cash grants, which could be used to temporarily provide gap financing to stalled projects to augment the appropriated funds described in the preceding proposal. This provision is in the House-passed version of the economic stimulus bill.
- Allow taxpayers to elect to accelerate, by up to 200% per year, the amount of housing credit claimed by investors in the first three years of the 10-year credit period.
- Permit taxpayers to carry back the housing credit for up to five years, and allow these credits to offset alternative minimum tax liability during this period. A provision to do this is in the version of the economic stimulus bill approved by the Senate Finance Committee and pending on the Senate floor.