This story was originally published in Affordable Housing Finance.
Sen. Maria Cantwell (D-Wash.) and Senate Finance Committee Chairman Orrin Hatch (R-Utah) have introduced the Affordable Housing Credit Improvement Act of 2017, a bill that seeks to increase low-income housing tax credit (LIHTC) authority by 50%.
The legislation (S. 548) is similar to a 2016 bill introduced by the senators.
It seeks to increase the annual housing credit authority by 50%, phased in over five years, and raise the small state minimum by 50%, also phased in over five years. The Joint Committee on Taxation estimates that this provision would cost $4.1 billion over 10 years.
The proposal would help create or preserve approximately 1.3 million affordable homes over 10 years, an increase of 400,000 more units than is possible under the existing program, according to Cantwell.
If passed, the bill would be one of the most significant updates to the LIHTC program in its 30-year history.
“At a time of great uncertainty for affordable housing, this legislation is a powerful step Congress can take to expand housing options for low-income families in New York and across the nation," said Jolie Milstein, president of the New York State Association for Affordable Housing. "The federal government must not ignore its obligation to strengthen LIHTC and protect it from diminishment under new tax policies."
The bill also seeks to make other key changes to the LIHTC program, including:
· Establish a minimum 4% rate for credits used to finance acquisitions and housing bond–financed developments;
· Allow for income-averaging at properties. Currently, LIHTC units are reserved for residents earning no more than 60% of the area median income (AMI). The bill creates a new test that would allow the 60% of the AMI ceiling to apply to the average of the apartments within a property. The maximum income to qualify for any housing credit apartment would be limited to 80% of the AMI;
· Provide flexibility for state housing credit agencies to increase the basis of projects in which 20% of the units are designated for occupancy by households with incomes that are 30% of the AMI or lower;
· Reform the student-occupancy rules to allow certain students to be eligible for LIHTC housing;
· Facilitate the development of housing for Native Americans by modifying the definition of difficult-to-develop areas to include projects located in an Indian area, making these projects eligible for a 30% basis boost; and
· Prohibit states from including local approval and contribution provisions as either a threshold requirement or part of a point system in their qualified allocation plans, except to the extent that contributions are taken into consideration as a part of a broader measure of a projects ability to leverage outside investment, and are considered on a level playing field with all funding sources.
At introduction, the bill had 11 other co-sponsors: Sens. Michael Bennet (D-Colo.), Cory Booker (D-N.J.), Susan Collins (R-Maine), Dean Heller (R-Nev.), Patrick Leahy (D-Vt.), Jeff Merkley (D-Ore.), Lisa Murkowski (R-Alaska.), Brian Schatz (D-Hawaii), Chuck Schumer (D-N.Y.), Ron Wyden (D-Ore.), and Ron Young (R-Ind.)
More than 2,000 organizations from all 50 states signed on to an Affordable Rental Housing ACTION Campaign letter in support of the legislation.