Updated November 10: Senate Finance Chairman Orrin Hatch (R-UT) has released his chamber’s draft tax reform legislation and estimated budget score, which are far more favorable than its counterpart in the House of Representatives towards affordable housing and community development tax credits. NH&RA salutes our many members and industry partners for our collective efforts, particularly over the past few days to advocate for our programs. Highlights of the legislation impacting our membership include:
- The 9% LIHTC program is retained without and changes.
- Private Activity Bonds (PABs) are retained, preserving the 4% LIHTC tax exempt bond program.
- The New Markets Tax Credit is retained without any changes.
- The Historic Tax Credit is retained but in a diminished form – the 10% credit for pre-1936 structures would be repealed and the 20% credit is reduced to 10%. Transition rule would apply to buildings owned as of January 1, 2018.
- The depreciation period for all residential and nonresidential real property is reduced to 25 years.
- The corporate tax rate is reduced to 20% but delayed until 2019 (the HR 1 would implement a 20% corporate tax rate starting in 2018)
Notably, while the LIHTC and PABs are retained in the Senate mark, none of the proposed changes in the Cantwell-Hatch legislation have been incorporated, nor are there any modifications to address the impact of lower corporate tax rates on the LIHTC.
We are pleased that the Senate legislation takes a more favorable view towards affordable housing, new markets tax credits and the historic tax credit; however, our work is not done. The Senate Finance Committee plans to begins its consideration of the bill on Monday, November 13. It is likely that Chairman Hatch will introduce a revised Chairman’s mark on or before Monday and it is our hope to work with our industry partners to incorporate additional improvements to the LIHTC and to retain the Historic Credit, undiminished.
On November 9 the House Ways and Means Committee has completed its mark up the Tax Cuts and Jobs Act (H.R. 1) and reported the measure out of committee on November 9. An additional manager’s amendment was adopted on party line votes. In its current form, the tax reform bill still preserves the 9% Low Income Housing Tax Credit (LIHTC) but eliminates Tax-Exempt Private Activity Bonds as well as the 4% side of the LIHTC. This change would cut affordable housing production in half and the Republican leadership in the House of Representatives shows no sign of altering this portion of the bill. The bill also terminates the NMTC which would deprive our most distressed rural and urban communities of billions in financing for healthcare centers, manufacturing facilities, schools, community facilities, and business expansions. The rollback of the federal Historic Tax Credit would endanger the essential funding required to put our historic buildings back to productive reuse. The measure must still be considered in the House Rules Committee before an expected vote on the floor the week of November 13.
Advocacy Needed in the Senate:
The Senate may introduce a Chairman’s Mark as early as this weekend. THE TIME TO SPEAK TO YOUR SENATORS IS TODAY:
- Thank them for retaining both the Housing Credit,Housing Bonds and New Markets Tax Credits and urge them to tell Chairman Hatch to hold his ground by ensuring these programs are retained in a final bill; and
- Ask that they convey support to Chairman Hatch for retaining the production power of the Housing Credit in a lower corporate rate environment.
- Ask that they convey their support for an undiminished Historic Rehabilitation Tax Credit so as to protect the revitalization of buildings that define our smallest rural communities and largest metropolitan cities.
Advocacy Needed in the House:
There is still potential for amending the House bill prior to a floor vote. Reach out to House Republicans, both on and off the Ways and Means Committee:
- Ask that they convey support to Speaker Ryan and Chairman Brady for Restoring multifamily Housing Bonds; and
- Ask them to tell Speaker Ryan and Chairman Brady that they must also retain the Housing Credit’s production power in a lower corporate tax rate environment.
- At the least, restore the final two years of the NMTC authorized under the bipartisan PATH Act or better yet, include temporary provisions protecting the NMTC under a new five-year authorization from 2017-2022.
- Preserve the Historic Tax Credit so as to protect the revitalization of buildings that define our smallest rural communities and largest metropolitan cities.
Ask representatives to at least publicly voice their concern about the impact of eliminating Private Activity Bonds, either as part of the Committee mark-up for members on the Ways and Means Committee, or in the press.
NH&RA is working in partnership with the Rental Housing ACTION Campaign, the New Markets Tax Credit Coalition and the Historic Tax Credit Coalition to advocate on behalf of these critical resources. New resources have been added to the Advocacy Toolkit on the ACTION Campaign website to assist in your outreach efforts. These include:
- ACTION Campaign statement on The Tax Cuts and Jobs Act
- Talking Points on Multifamily Housing Bonds
- Novogradac & Co analysis of the Tax Cuts and Jobs Act’s impact on affordable housing
- Novogradac & Co analysis of the Tax Cut and Job Act’s impact on job creation
- Sample letters to Congress requesting support for the Housing Credit and Housing Bonds in tax reform
- Find contact information for your House Representative
- Find contact information for your Senators
Additional Resources relating to the NMTC and Historic Credits are also available:
- NMTC Coalition Advocacy Toolkit
- Historic Tax Credit Coalition Advocacy Toolkit
- State and congressional district maps with historic credit economic impact data
- Historic Credit Talking points
- Interactive HTC mapping tool developed by Novogradac and Company