NY Will Lose $4.5 Billion, 17k Affordable Homes Annually!
The tax reform plan, “The Tax Cuts and Jobs Act (HR 1)“, released by House Republicans yesterday proposes the elimination of Tax-Exempt Private Activity Bonds which generate as-of-right 4% Low Income Housing Tax Credits (LIHTC). Over a 5-year period, housing bonds have created more than 140,000 jobs across the state. This program is critical to affordable housing development and preservation in New York. The elimination of Private Activity Bonds or “volume cap” would be a devastating blow to affordable rental housing in New York as well as to affordable homeownership opportunities for many first-time homebuyers receiving home financing through the State of New York Mortgage Agency (SONYMA). While the 9% LIHTC program would be retained, it will be weakened by the lower corporate tax rate, requiring more subsidy in projects and none of the bi-partisan reforms to the program found their way into this bill. Additionally, New Markets Tax Credit and Historic Tax Credit are also repealed in this bill- they are often used to support community development and/or affordable housing projects.
While there has been intense focus on affordability for homeowners and real estate values in New York relating to changes to the Mortgage Interest Deduction (MID) and the State and Local Tax Deduction (SALT), damage to the housing market does not end with homeowners. This bill is also a bad deal for renters in need of affordable housing and will undermine the State and City affordable housing plans, costing New York $4.5 billion annually with the loss of 17,128 affordable homes each year. Furthermore, the impact of housing bond elimination would extend beyond the amount of affordable homes being developed and negatively impact New York’s economy.
Here is a breakdown of what this bill will cost affordable housing in New York state annually combining City and State issuing agency data (does not include number of homes financed with recycled bonds):
- $2,014,745,000 Tax-Exempt Private Activity Bond Financing
[$1,271,745,000 (NYS), $743,000,000 (NYC)]
- $1,436,000,000 4% LIHTC Equity
[$839,000,000 (NYS), $597,000,000 (NYC)]
- $83,400,000 9% LIHTC Equity (result of lower corporate tax rate)
[$61,500,000 (NYS), $21,900,000 (NYC)]
- $611,455,000 Recycled Bond Program
[$277,035,000 (NYS), $334,420,000 (NYC)]
- $346,097,300 SONYMA Mortgages for Affordable Homeownership
- 17,128 Affordable Homes Not Financed Annually
[9,431 Multifamily Rental (NYS), 5,800 Multifamily Rental (NYC), 1897 Affordable Homes Not Purchased (NYS)]
To get a sense of how these numbers compare to affordable housing production, one third of all affordable housing created or preserved in New York City’s affordable housing plan is financed with Private Activity Bonds and the 4% Housing Credits they generate. 85% of Housing Credit developments in the City use bond financing and 4% credits.
Elimination of this program will devastate NYC’s affordable housing plan and will certainly impede plans recently announced to expand it. Similarly, Governor Cuomo’s statewide housing plan with emphasis on supportive housing for the homeless will be severely impacted. For more information on housing bonds see our infographic.
WE NEED YOU TO TAKE ACTION TODAY!!!!!!!!
Please join us in advocating against the elimination of Private Activity Bond! Take these 3 steps:
- Call your member of Congress and also call NY Republicans, especially Rep Tom Reed (23rd) on the Ways & Means Committee linked here: Members of Congress
- Tell them that the elimination of tax-exempt bonds would hurt low-income renters in need of affordable housing.
- Ask for Private Activity Bonds to be restored in the Chairman’s Amendment
CALL TODAY as the Chairman’s Amendment to the Bill is expected to be finalized by MONDAY!