Housing Credit Bills Bring Expansion and Improvements

Legislation | June 11, 2019 | by Linda Couch

Bills to expand and improve the Low Income Housing Tax Credit program were introduced in the Senate and House on June 4, 2019.

The Affordable Housing Credit Improvement Act (AHCIA) of 2019 bills are sponsored by Senators Maria Cantwell (DWA), Johnny Isakson (R-GA), Ron Wyden (D-OR), and Todd Young (R-IN), and Representatives Suzan DelBene (D-WA), Kenny Marchant (R-TX), Don Beyer (D-VA) and Jackie Walorski (R-IN).

Similar, but not identical, bills were introduced during the last session of Congress. The current bills would both expand state LIHTC allocations by 50%; last session, only the Senate bill had included this expansion. The 50% expansion would be phased in over five years and is in addition to retaining the 12.5% allocation boost granted after the 2017 tax reform bill undercut the power of housing credits.

The new bills provide additional fixes for Housing Credit properties reaching the end of their initial 15-year compliance period. The tax code permits a nonprofit general partner to obtain full ownership of its property through a “right of first refusal.” However, the transfer of properties to nonprofits through this right of first refusal has been problematic between some nonprofits and investors. The new bills would clarify the right of first refusal for existing properties (which the previous bill only did for future properties). The bills clarify that the property may be acquired directly or by the purchase of a partnership interest, and that the property includes all assets held for development, operation, or maintenance of the building. This section of the bill also clarifies that he right of first refusal or purchase option may be exercised without the approval of the investor and in response to any offer to purchase the property, including by a related party.

The identical Senate and House bills, S. 1703 and H.R. 3077, would also allow basis boosts to communities serving more than 20% extremely low-income households (up to a 50% boost) or communities in rural areas (up to a 30% boost), among other provisions that will help preserve and expand LIHTC homes.

The LIHTC program is an important source of funding for affordable housing for older adults. More than 26% of LIHTC homes include someone 63 years old or better. Meanwhile, only one of every three older adults eligible for housing assistance actually receive it because existing programs are too small to meet the need.

Take ACTION NOW to urge legislators to support tax credit bills through this LeadingAge Action Alert!