The House Democrats’ recently released infrastructure bill, Moving Forward Act (H.R. 2), includes a myriad of housing provisions including:
- A permanent minimum four percent rate, effective for buildings that receive determination of a LIHTC allocation after December 31, 2019, and which are placed in service by the taxpayer after such date;
- An increase in the annual nine percent LIHTC allocation from $2.81 per capita to $4.56 per capita, and an increase in the small state minimum from $3,217,500 to $5,214,051, phased in over two years;
- Lowering the 50 percent test for bond financing to 25 percent;
- Providing a 150 percent first year credit to address adjuster issues that have arisen as a result of the COVID-19 crisis;
- Basis boosts to facilitate certain types of developments:
- A 50 percent basis boost for developments serving extremely low-income tenants, along with another ten percent increase in Housing Credit allocations to states (on top of the existing allocation) to be used specifically for these developments;
- A 30 percent basis boost for properties in rural areas;
- A 30 percent basis boost for properties in Native American areas; and
- The ability for the state housing agency to provide a 30 percent basis boost as needed for properties financed by Housing Bonds.
- A prohibition on local approval and contribution requirements;
- Extending the following two LIHTC deadlines for one year:
- Ten percent test deadline and
- Rehabilitation expenditure deadline.
- An expansion of Private Activity Bonds, increasing the state ceiling from $105 per capita to $135 per capita and increasing the small state minimum;
- A new 25 percent low-income housing supportive services credit to cover a portion of costs for providing certain resident services at LIHTC properties;
- A provision to curtail the use of Qualified Contracts by repealing the option going forward and changing the formula that determines purchase price on existing properties (i.e. the Save Affordable Housing Act of 2019 ( 1956/H.R. 3479);
- A provision to implement the Neighborhood Homes Investment Act (R. 3316), which would create a new credit to encourage rehabilitation of deteriorated homes in distressed neighborhoods;
- Permanently extend the New Markets Tax Credit at $5 billion (with additional allocation in 2020 and 2021);
- Increase the Historic Tax Credit applicable percentage from 20 percent to 30 percent for five years; and
- Delay the phasedown of the Renewable Energy Investment Tax Credit until 2026.
The bill would also authorize $100 billion for broadband and $100 billion in funding for housing, including:
- $70 billion for the Public Housing Capital Fund;
- $10 billion for CDBG;
- $5 billion for HOME; and
- $5 billion for the Housing Trust Fund.
The section by section summary can be found here. A vote on the legislation is expected before the Fourth of July recess. While the bill is likely to pass the Democrat-led House, it will face greater resistance in the GOP-led Senate. The bill does not include any pay-fors and Republicans are already panning the bill as dead-on-arrival. However, the bill may set an important marker for future infrastructure negotiations. The Trump administration is reportedly drafting a $1 trillion infrastructure package aimed at spurring the economy.