At a March 16, Senate Committee on Finance hearing on the Administration’s FY24 budget request, Committee Chair Ron Wyden (D-OR) highlight a few budget matters he called “important to the Treasury.” Treasury Secretary Janet Yellen was the hearing’s sole witness.

“First, last week the committee had a very good bipartisan hearing on affordable housing,” Chair Wyden said. “This is an area where I believe there’s a clear opportunity for bipartisan cooperation. The budget proposes expanding the low-income housing tax credit, creating the neighborhood homes program, and other ideas. Senator Cantwell, Senator Cardin, Senator Young, they’re championing bipartisan efforts. I’m going to work with them closely on these proposals and more. This crisis needs a solution. There is no substitute. You and I have talked about this as well, Madam Secretary, for increasing supply of housing.”

In her testimony, Secretary Yellen noted Treasury’s request to increase the supply of affordable housing. As part of Treasury’s FY24 proposals, the Administration is seeking authority to increase state housing credit allocations. For 2023, each state receives $2.75 per capita in housing credits to allocate, subject to a minimum of $3,185,000 for smaller states. The Administration is proposing state per capita allocations (for 2024, $4.25 per capita with a small state minimum of $4,901,620; for 2025, $4.88 per capital with a small state minimum of $5,632,880; for 2026 and subsequent years, these amounts would be the amounts for the prior year, indexed for inflation as under current law.)

Treasury’s request would also lower the bond financing threshold from 50 to 25% of project development costs; reducing the Private Activity Bond financing requirement “will further expand the reach of the credit to more projects and thereby further support housing supply,” Treasury’s budget documents say.

The request would also repeal the qualified contract provision and replace the nonprofit right of first refusal with a purchase option. Treasury argues that the qualified contract provision and the nonprofit right of first refusal are “no longer function as intended. The statutorily determined purchase price in a qualified contract is generally higher than what buyers are willing to pay for a building subject to affordability and habitability requirements. As a result, the qualified contract provision serves to reduce the duration of the affordability and habitability requirements. LIHTC investors have imposed hurdles to the use of ROFRs that allow LIHTC projects to be too easily converted to market-rate housing.”

LeadingAge strongly supports the housing credit increase and Treasury’s proposed housing credit improvements.

More information on the March 16 Senate Committee on Finance hearing is here.

Read Treasury’s FY24 request here.