Today’s Read: What the Tax Reform Bill Means for Housing
Tax reform has been the center of attention this month, with the House voting last Thursday to pass The Tax Cuts and Jobs Act (HR 1), which would dramatically change the tax code. Although the impact the bill will have on income taxes has been widely debated, the House tax bill will also have significant – and potentially devastating – ramifications for the production of desperately needed affordable housing. The tax bill approved by the House would eliminate private activity multifamily housing bonds, which are a critical tool in building and preserving affordable housing. With a near-record 62,351 New Yorkers going to bed in a homeless shelter tonight, and countless others struggling to pay unaffordable rents, elected officials should be expanding the funding sources for affordable housing – not reducing them. As the Senate debates its own version of tax reform in the coming weeks, it is essential that they recognize how their decisions could help or hurt homeless Americans.
Jeff Andrews of Curbed explained what the House tax reform bill means for housing:
Affordable housing advocates previously expressed opposition to the House tax reform bill over indirect changes to the Low-Income Housing Tax Credit, which incentivizes private investment in affordable housing for low-income Americans. While the bill explicitly retains LIHTC, it repeals any use of tax-exempt private activity bonds, which are used in as many as 60 percent of LIHTC development projects.
The bill also cuts the corporate income tax rate from 35 to 20 percent, which experts claims will lower the amount of equity developers are able to raise for all LIHTC projects, whether they use private-activity bonds or not. This would lead to fewer new affordable housing units produced by the program.
In response to the House vote, the Coalition for the Homeless and 11 other affordable housing organizations released the following statement:
“We are deeply disappointed in the four members of the House’s New York delegation who voted for a tax bill that, if signed into law, would make our statewide housing and homelessness crisis even worse. The future of affordable housing production throughout New York State is now in jeopardy.
“The bill passed today by the House would eliminate private activity multifamily Housing Bonds, which play a crucial role in financing the production of affordable housing. As we made clear to every member of the New York delegation, the elimination of these Housing Bonds would result in an annual statewide loss of approximately $4.5 billion in affordable housing financing, preventing the production of approximately 17,000 affordable homes and 28,000 jobs across our state each year. Taking this action is especially unconscionable at a time when rents are still rising, homelessness is increasing and public housing infrastructure continues to deteriorate.
“It is not too late for Congress to preserve housing efforts in New York and across the nation. The Senate has proposed a tax bill that would not eliminate Housing Bonds, and that must remain true in any future bill drafts. Everyone in Congress must remember that their constituents are relying on them to protect and expand access to desperately needed affordable housing.”