December 18, 2015 — Congress voted to approve a tax and spending legislation that includes a permanent minimum 9% Low-Income Housing Tax Credit rate for new construction and substantial rehabilitation and extends the New Markets Tax Credit through 2019. Unfortunately, the legislation does not include a credit floor for the 4% LIHTC.

The minimum 9% LIHTC rate has a retroactive effective date of January 1, 2015. This provision makes LIHTC development more predictable, significantly strengthening the program.  The ACTION campaign said it plans to continue to encourage Congress to extend the 4% credit minimum rate. The NMTC provision would have an effective date of December 31, 2014.

The House intends to vote on the legislation by the end of the week, and a Senate vote will follow.

House Ways and Means Chairman Proposes Two-Year Tax Extenders Package

December 7, 2015 — House Ways and Means Committee Chairman Kevin Brady (R-TX) proposed a two-year tax extenders package. The package includes a fixed rate for the 9% Low-Income Housing Tax Credit for 2015 and 2016. It does not include a fixed rate for the 4% LIHTC.

The proposal also includes an extension of the New Markets Tax Credit and the extension of credits for energy-efficient new homes.

This proposal serves as a back-up to broad tax extenders legislation. Congressional leaders and White House representatives are still officially negotiating over the more comprehensive legislation, which could include permanent tax credit rates. However, negotiations have been been stalled since late last week.

Progressing Possibility of Permanent Minimum Credit Rates

December 1, 2015 — Senate Finance Chairman Orrin Hatch (R-UT) and House Ways and Means Chairman Kevin Brady (R-TX) are negotiating with the White House over tax extenders legislation, which would determine the future of minimum 9 and 4 percent Housing Tax Credit rates. According to CQ, Hatch said today that they had settled on an outline for permanent tax extensions for businesses and individuals, and negotiators are working out the details.

The ACTION Campaign suggested steps to encourage permanent minimum credit rates, which would support the development of affordable housing.

  • Contact your members of Congress, especially those who have already expressed support for permanent minimum credit rates. Click here for a state-by-state list of cosponsors for existing bills.
  • Ask your members of Congress to encourage the House Ways and Means Committee, Senate Finance Committee, as well as House and Senate leadership, to include minimum credit rates in the tax extenders package.

ACTION suggests these key messages:

  • Minimum 9 and 4 percent Housing Credit rates should be extended permanently. Minimum Housing Credit rates must be extended for at least two years in order to have any practical benefit. A retroactive extension of minimum credit rates for 2015 only would not benefit developments for which the credits have already been awarded.
  • Minimum Housing Credit rates make the development of affordable housing more predictable and financially feasible. With the ‘floating rate’ in effect, there is 15 – 20 percent less Housing Credit equity available for any given affordable housing development, creating financing gaps that are increasingly difficult to fill. Use our new Housing Credit rate fact sheet to help explain the need for minimum Housing Credit rates.
  • Minimum Housing Credit rates provide significant benefit for minimal cost. The Joint Committee on Taxation estimates that the minimum 9 and 4 percent rate extensions included in the Senate Finance Committee-passed tax extenders legislation would cost only $5 million over 10 years.
  • Minimum Housing Credit rates have strong bipartisan support. The minimum Housing Credit rate legislation in the Senate, S. 1193, has 29 co-sponsors, including 7 members of the Senate Finance Committee. The companion legislation in the House, H.R. 1142, has 77 co-sponsors, including 28 members of the Ways and Means Committee. The Senate Finance Committee also approved its extension of minimum 9 and 4 percent rates with bipartisan support.
  • Permanently extending minimum credit rates will ultimately benefit low-income families. The White House maintains that if any tax extenders are made permanent, some of them must benefit lower- and middle-income families.
  • The Housing Credit benefits urban, suburban and rural communities in every state. Use our state and district fact sheets to show the impact of the Housing Credit locally.

If you have any questions, contact Emily Cadik at ecadik@enterprisecommunity.org.