In the midst of a relentless housing affordability crisis, advocates are increasingly vocal about the need for legislative action to support the construction and preservation of affordable housing units across the United States. Specifically, the House Committee on Ways and Means is being urged to prioritize the expansion of Private Activity Bonds (PABs) as a key tool in funding affordable housing initiatives. As housing costs skyrocket in urban and suburban areas alike, it becomes crucial to explore fiscal pathways that can support the development of adequate housing options for low- and moderate-income families.
Emily Cadik, the CEO of the Affordable Housing Tax Credit Coalition (AHTC), expressed optimism regarding the potential for significant, long-awaited reform during the upcoming lame duck session of Congress. AHTC aims to see these proposals through, which encompass enhancements in housing credit allocations and adjustments in bond financing thresholds for specific housing projects. Such changes would not only alleviate immediate funding challenges but also enhance the overall efficiency of capital utilization in affordable housing development.
The Affordable Housing Credit Improvement Act (AHCIA), a legislative proposal that has traversed the halls of Congress since 2016, is at the center of these discussions. A renewed version of this act was introduced in May 2023, but it has since encountered stagnation in the Senate. This persistent legislative challenge underscores the complexities involved in addressing housing needs amidst a gridlocked political climate.
The AHTC recently articulated its positive stance on this act in a letter directed to the Community Development Tax Team, established by Ways and Means Committee Chair Jason Smith (R-Mo.), in April. The team aims to gather input on the future of the Tax Cuts and Jobs Act (TCJA), which is set to expire at the end of 2025. The context here is crucial, as any potential reforms to the TCJA could create openings for more robust support for affordable housing initiatives.
One of the pivotal changes proposed in the AHCIA concerns the adjustment of the bond financing threshold associated with the Low-Income Housing Tax Credit (LIHTC). Currently, developers must secure at least 50% of project funding through PABs to qualify for critical 4% LIHTCs. Advocates argue for a reduction of this threshold to 25%, which would not only streamline financing but also unlock substantial additional resources for affordable housing projects. By doing so, states could better utilize their bond volume caps, thereby facilitating the creation of new, affordable housing units in a market that is increasingly over-saturated and undersupplied.
Furthermore, the National Council of State Housing Agencies (NCSHA) stands in alignment with AHTC in advocating for the removal of caps on mortgage revenue bonds and multifamily housing bonds for five years. These suggested modifications are seen as essential to allow municipalities the necessary flexibility to rise to the demand for affordable housing. As states struggle to cope with escalating housing needs, these legislative changes could provide vital relief and spur significant progress.
The political landscape surrounding affordable housing initiatives is also shifting, with figures like Vice President Kamala Harris emphasizing the importance of housing-related reforms. Her backing adds momentum to the efforts of both AHTC and NCSHA, who believe that bipartisan support could enhance the AHCIA’s chances of advancement in Congress, regardless of the outcomes of impending elections.
Despite the current legislative hurdles, there remains a cautious optimism that a collective push for housing tax legislation may pave the way for significant reforms. Cadik points out that as the TCJA approaches its sunset in 2025, the urgent need for bipartisan cooperation on tax policy becomes increasingly evident. To avoid sweeping tax increases, lawmakers from both parties must find common ground, potentially unlocking opportunities for PAB reform and associated affordable housing initiatives.
While the road to advancing affordable housing legislation is fraught with challenges, the concerted efforts of advocates, policymakers, and concerned citizens are slowly but surely drawing attention to an issue that affects millions of Americans. As housing prices surge and the gap between supply and demand widens, the plea for legislative action becomes not just a matter of policy, but one of social justice and economic necessity. It is imperative that Congress heeds these calls and works towards comprehensive reforms that ensure access to affordable housing for all in this country.