Amid a critical housing crisis in the United States, advocates for affordable housing are intensifying their efforts, urging the House Committee on Ways and Means to vote on significant legislation aimed at increasing the availability of affordable housing units. One of the key components of this advocacy is the expansion of Private Activity Bonds (PABs), a financial instrument that would bolster funding for affordable housing projects. Emily Cadik, the CEO of the Affordable Housing Tax Credit Coalition (AHTC), articulated the urgency of the situation, expressing optimism that Congress would act on these necessary legislative proposals during the upcoming lame duck session.
AHTC’s advocacy is not just noise; it is backed by concrete proposals intended to enhance the efficacy of the Low-Income Housing Tax Credit (LIHTC) program. In a communication addressed to the Community Development Tax Team, Cadik urged lawmakers to reconsider the bond financing thresholds, which are pivotal for leveraging further investment in affordable housing.
One of the focal points of the current discourse is the re-introduction of the Affordable Housing Credit Improvement Act (AHCIA), a piece of legislation that has been lingering in Congress since 2016. This latest incarnation of the AHCIA, presented in May 2023, aims to reform the bond financing requirements necessary for developers to access critical funding. Currently, developers must secure at least 50% of funding through private activity bonds to qualify for 4% Housing Credits, a bar that many consider too high. Advocates propose reducing this percentage to 25%, which they argue would not only facilitate more efficient use of tax-exempt bonds but also stimulate greater investment from private entities into affordable housing development.
The situation is exacerbated as many states already find themselves reaching or exceeding their bond volume caps. The changes proposed under AHCIA could allow states to utilize their bond limits more effectively and unlock new financing pathways for affordable housing initiatives. According to AHTC, having an increase in qualified housing developments could diversify housing stock and ease the financial burdens many communities face.
While the enthusiasm for the AHCIA is palpable among housing advocates, the legislation’s journey through Congress has not been without obstacles. Currently stalled in the Senate, proponents of the AHCIA face the challenge of identifying a suitable legislative vehicle to carry the bill forward. This impasse is frustrating to those on the front lines of housing advocacy, as the urgency of addressing affordability grows more pressing by the day.
In a show of solidarity, the National Council of State Housing Agencies also sent letters of support to the Ways and Means Committee, echoing the AHTC’s call for lowering the bond thresholds necessary for accessing vital LIHTC credits. Additionally, their recommendations include removing the cap on mortgage revenue bonds and multifamily housing bonds for a period of five years, allowing municipalities to better respond to the growing demand for affordable housing.
Key governmental representatives, including Vice President Kamala Harris, have been champions of housing-related initiatives, bringing increased visibility to the issue. Jennifer Schwartz from the National Council of State Housing Agencies reflected on the importance of political momentum, acknowledging the boxed-in nature of current tax legislation discussions. She emphasized that regardless of the political landscape following the presidential election, the AHCIA remains a viable legislative option, especially with bipartisan support.
Despite the political complexities enveloping tax legislation, advocates like Cadik remain hopeful. Recognizing that the expiration of substantial tax cuts in 2025 could spur bipartisan collaboration, they suggest leveraging the wide-reaching impacts of the Tax Cuts and Jobs Act (TCJA) discussions as a platform for affordable housing reforms.
The calls from housing advocates to reform and expand the use of Private Activity Bonds illustrate both the challenges and opportunities facing affordable housing initiatives in America. While procedural hurdles exist, the initiative reflects a growing public and governmental recognition that affordable housing is not just a social issue, but a crucial aspect of economic stability. As the conversation continues in Congress, the importance of acting swiftly to address these barriers has never been greater, laying the groundwork for meaningful reforms that could reshape the landscape of affordable housing for generations to come.