Over the past few months, AHTCC has stressed to its members the importance of presenting to Congress a well-crafted and broadly supported legislative plan designed to spur new investment in the Housing Credit program while also assisting current investors in the program. Through the efforts of AHTCC and many other Housing Credit industry partners, the following proposals have been identified as changes the majority of the industry can support.
AHTCC will continue to work with its industry allies to build support for these proposals within the industry and on Capitol Hill. AHTCC encourages its members to speak with their Congressional delegations about these proposals – August in a GREAT time to schedule meetings when Members are home in their districts/states. Thirty-nine national and local affordable housing organizations have signed-on to support this package.
In announcing this package, the broad industry coalition also announced the creation of a new website, www.rentalhousingaction.org, designed to track the progress of these legislative proposals. Talking points will soon be added to the website as well as other information that will assist you in educating your elected officials. AHTCC encourages you to use this resource in addition to the information found at www.taxcreditcoalition.org.
Housing Credit Legislative Priorities
- Extend the Housing Credit Exchange Program to Maintain the Development Pipeline in 2010. Congress should extend for another year the Section 1602 Housing Credit exchange program as established in the Recovery Act and modify it to include the four percent Housing Credits that accompany tax-exempt multifamily housing bonds. This extension and modification will give each state the ability and resources to continue to fund needed affordable rental housing in 2010 based on the Housing Credit model while the investment market recovers. While extending it, Congress should also address exchange program implementation issues to ensure that program assistance is most effectively used.
- Immediately Stimulate, Broaden the Investor Base for, and Maintain Housing Credit Investment Demand by Increasing the Housing Credit Carryback Period. Congress should enact investment incentives to immediately stimulate and help restore longer term Housing Credit investment demand. To do so, Congress should enact a two-part proposal that would increase the current law Housing Credit carryback from one to five years:A) To immediately stimulate investment demand, investors with existing Housing Credit-financed housing should be permitted to carryback for up to five years Housing Credits from their returns they file in the 2008-10 tax years, but only to the extent they immediately reinvest credit amounts carried back in new affordable rental housing. In order to be fully effective in stimulating additional investment, the alternative minimum tax relief Congress provided under the Housing and Economic Recovery Act of 2008 should be extended to Credits carried back under this part.B) In addition, in order to broaden and maintain steady investor demand, Congress should permit taxpayers to carryback credits generated by new Housing Credit-financed housing up to five years as they arise during the ten-year credit period. This part would apply only to investments in buildings for which credits are first claimed after 2008. This will enable participating by investors for whom a significant barrier to program participation is the uncertain prospect of ten straight years of reliably positive taxable income. Allowing investors in new housing to carry back Housing Credits up to five years also helps put the Housing Credit on a more equal footing with other tax credit programs, which have shorter compliance and investment holding periods.
- Further Broaden the Investor Base. Under present law, the tax code’s passive loss rules restrict the pool of potential Housing Credit investors. The undersigned organizations support providing parity with widely held C Corporations by allowing some S Corporations, Limited Liability Companies, and closely-held C Corporations to offset revenue with Housing Credit tax benefits that would otherwise be taxable when passed through to the owners of the businesses. To ensure the high standards of oversight associated with the program are maintained, we support limiting this ability to such entities that satisfy the following tests: (1) have at least $10 million in annual gross receipts; (2) the principal purpose of forming the entity is not the avoidance or evasion of Federal income tax; and (3) there is an expectation of reasonable asset management. Such a policy change will broaden investor demand and prove particularly beneficial in rural areas where many community banks and other potential investors are currently prevented from participating in the program.
If you have questions concerning these legislative proposals please contact the Coalition.
Coalition General Counsel, Richard S. Goldstein – 202-585-8730 or rgoldstein@nixonpeabody.com
Coalition Legislative Counsel, James F. Miller – 202-282-5724 or jfmiller@winston.com
Coalition President, Ronne Thielen – 949-263-6466 or rthielen@centerline.com
Coalition Executive Director, Victoria Spielman – 202-282-5349 or victoria.spielman@taxcreditcoalition.org