U.S. Senator Maria Cantwell (D-Wash.) recently introduced legislation (S. 3326, bill text not available at press time) that would extend for one-year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program and expand the program to include 4 percent LITHCs. The “Job Creation and Affordable Housing Act” would also allow a 5-year carryback of the LIHTC. The measure is co-sponsored by Sens. John Kerry (D-Mass.) and Barbara Boxer (D-Calif.). The bill has been referred to the Senate Finance Committee for consideration.
In recent meetings with NH&RA, Senate Finance Committee staff reported that the Committee may attempt to mark-up and pass a final version of tax extender legislation (HR 4213) in the next two weeks. Efforts are underway to incorporate S. 3326 into this legislation, which along with Small Business legislation (HR 4849) are the most likely vehicles for tax legislation.
Our legislative sources indicate that that Senate Finance Chairman Max Baucus (D- Mont.) and House Ways & Means Chairman Sander Levin (D-Mich.) are currently negotiating a final version of the measure. A final compromise could be reached possible as soon as Wednesday, May 12. Once the compromise is complete, the bill will be marked-up by the House Ways & Means Committee, tentatively scheduled for Thursday, May 13. Congressional leadership has not determined the final size of the tax and spending packages, nor on the revenue-raising offsets but Speaker of the House Nancy Pelosi (D-Calif.) has indicated it is the Democratic Caucus’s priority to pass jobs legislation in the next two weeks.
As previously reported, our sources also indicate that House and Senate leadership are considering amending the tax extenders bill (HR 4213) to shift an extension of the Build America Bonds (BAB) program from the small business bill (HR 4849) to the tax extenders legislation. The shift is being urged because of concerns that the tight Senate calendar may not leave enough time to move other tax bills this year. HR 4213 also includes extensions of the Section 1602/Exchange Program, New Markets Tax Credit and GO Zone Historic Tax Credit and Bonus Depreciation Provisions.
The Build America Bonds program, created in last year’s economic stimulus law, provides a federal government subsidy for interest on certain municipal bonds, which are taxable and carry a higher interest rate than typical tax-exempt bonds. It is slated to expire at the end of 2010. The provision from HR 4849 currently being considered for the extenders legislation would extend the BAB program through April 1, 2013.
There are budget and cost concerns around the BAB program which complicate its passage. The subsidy attached to the BAB is more expensive than traditional tax-exempt bonds, which has drawn opposition from some Republicans. This is further complicated by the fact that some of the revenue measures from earlier versions of HR 4213 were used in the health care reconciliation law, and thus need to be replaced. House and Senate negotiators are still considering alternative revenue-raising offsets, which will be necessary to obtain Republican support in the Senate.
If the House is successful in moving the popular BAB program to the Extenders legislation is may adversely impact the likelihood of passage this year of other key provisions in HR 4849 including:
- An expansion of the 1602 LIHTC Exchange program to projects financed using tax-exempt bonds with 4 percent tax credits.
- An exemption that would allow new markets tax credits to be used to offset the alternative minimum tax. Similar exemptions are already in place for the LIHTC and Historic Tax Credit.
