The full Senate is expected to take up its tax bill the week of November 27. The letter, which advocates should encourage their Senate and House Republican members to sign onto, asks Congressional leadership to protect private activity bond (PABs) financing and advance refunding bonds in any final tax bill. 

The House's tax bill eliminates PABs, whose use is the only way to trigger the use of 4% Low Income Housing Tax Credits (LIHTCs). In 2016, more than 50% of all LIHTCs used were via the 4% LIHTC. According to Novogradac, the elimination of PABs would result in the loss of 788,000 to 881,000 affordable homes over the next 10 years. 

Both the House and Senate tax bills would end advance refunding bonds. Advance refunding occurs when a borrower seeks to refinance bonds at a lower interest rate during the “call protected period” (typically 10 years), meaning the holder of the bonds can’t call and demand payment. The 1986 Tax Act allows one of these refinancings’s in the life of the bonds. It is very common for LeadingAge members to utilize advance refunding. 

"Private activity bonds finance exactly the sorts of public-private partnerships of which we need more of, not less. These bonds help finance housing for low- to moderate-income families that otherwise would not get built; toll roads and expressways, airports and seaports; hospitals and universities. The Administration has made it explicitly clear that is supports the expansion of private activity bond eligibility," the letter says.

Senators and Representatives have until November 27 to sign onto this letter. House and Senate staff should contact Bill Hulse in Representative Hultgren's office to sign onto the letter.

Advocates are urged to contact their members as soon as possible to protect these critical tools.