The Senate Finance Committee released their tax reform proposal yesterday. Private Activity Bonds, which generate 4% Low Income Housing Tax Credits, are retained! With support in the Senate, there is now a chance the program will be preserved as tax reform moves forward. Republicans are extremely motivated to move tax reform forward quickly. The Senate and House will have to work out the differences between their bills and are anxious to do so in advance of the debt limit and budget expiration which happens on Dec 8th.
The Senate proposes that the current corporate tax rate be reduced to 20% meeting the goals of President Trump and the House but offsets costs with a one year delay in implementation. There are also other differences from the House bill in treatment of household income tax categories, credits and deductions. For example, state and local tax deduction (SALT) is eliminated in the Senate bill but the mortgage interest deduction in maintained in contrast to the House bill. None of the Cantwell-Hatch LIHTC improvements made it into the bill, which is disappointing since we were seeking no-cost reforms like Income Averaging. The bill also fails to include any solutions to make LIHTC whole in anticipation of lower pricing resulting from reduced demand caused by a lower corporate tax rate. Here are some other housing-related details:
- New Markets Tax Credit is preserved.
- Advance refundings are repealed.
- Historic Tax Credit is modified to a 10% credit and the credit for pre-1936 buildings is repealed.
- Depreciation on residential and nonresidential real estate reduced to 25 years.
In contrast the House bill, The Tax Cuts and Jobs Act (HR 1) would repeal Private Activity Bonds (“Volume Cap”), which would effectively eliminate the 4% Housing Credit. Since the bill’s release, NYHC has been advocating to gain support for Private Activity Bonds and raise awareness of the devastating impact elimination of the program would have on affordable housing. We are working closely with statewide and national partners. We need you to join us in this advocacy. Please call each New York Republican Member of Congress and ask them to express support for Private Activity Bonds to Ways and Means Committee Chairman Brady today.
It is critical that House Republicans members show support for this program which is still at great risk of elimination. Please see advocacy resources below.
NYHC’s TAX REFORM ADVOCACY, OUTREACH & ANALYSIS
NYHC is leading the charge to protect PABs and 4% Housing Credits. We are working in coordination with New York and national advocates and have activated new partnerships with advocates in Florida, Texas, New Jersey and California. We will continue to expand our network in order to preserve private activity bonds in tax reform.
NYHC has calculated that New York alone would lose $4.5 billion in affordable housing investment, 17,000 affordable homes and 28,000 jobs annually if Private Activity Bonds are eliminated. Furthermore, NYHC has drawn attention to how it would severely hamper housing recovery efforts across disaster-affected areas and also how it would result in a loss of $3 Billion for NYCHA impacting 34,000 residents whose units were slated for a RAD conversion. Of course, bonds don’t just finance housing, other community assets are also at risk in the House bill including hospitals, community health centers and even some education facilities.
NYHC Infographic: Tax Exempt Bonds = Housing + Jobs
Rep. Zeldin (R-NY1)
Rep. King (R-NY2)
Rep. Donovan (R-NY11)
Rep. Crowley (D-NY14), Ways and Means Committee Member
Rep. Faso (R-NY19)
Rep. Stefanik (R-NY21)
Rep. Tenney (R-NY22)
Rep. Reed (R-NY23), Ways and Means Committee Member
Rep. Katko (R-NY24)
Rep. Collins (R-NY27)
In addition to the press coverage achieved last week, all major papers in New York mentioned PABs this week and the Miami Herald this morning. Find new press coverage below:
- Miami Herarld: Tax Plan May Limit Access to Housing
- New York Daily News: Death by a Thousand Cuts
- New York Times: Want Kids, a Degree or a Home? The Tax Bill Would Cost You
- Wall Street Journal: Senate Could Be More Favorable to Private-Activity Bonds
CALL YOUR ELECTED OFFICIALS TODAY!
We need your help to reinforce this message. Please use the district-level impact analysis for NY Republicans and Ways & Means Committee Members found below. Outreach is especially important to Rep Reed (23rd) on the Ways & Means Committee, Rep Stefanik (21st), Rep Tenney (22nd) and Rep Katko (24th). We are working closely with City and State Housing agencies to analyze the impact for the other NY Congressional districts as well.
If you have never called your elected officials before, now is the time to start! Please join us in advocating against the elimination of Private Activity Bond! Take these 3 steps:
- Call NY Republican Members of Congress, especially Rep Reed (23rd) on the Ways & Means Committee, Rep Stefanik (21st), Rep Claudia Tenney (22nd) and Rep John Katko (24th) 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 House Bill and to be kept when the House and Senate conference to reconcile any differences between their two bills.
Please do not delay in making these calls as legislation is moving extremely fast!!!