A bipartisan group of Senate and House legislators have proposed a sweeping bill to help solve the affordable housing issue yesterday, joining many of the Democratic presidential nominees in making housing a larger issue on the national stage, and showing the nationwide nature of the housing shortage.
The Affordable Housing Credit Improvement Act of 2019 seeks to close the gap in affordable rental units across the nation. It would do so by expanding and strengthening the Affordable Housing Tax Credit, also known as the Low Income Housing Tax Credit, a pillar of federal housing policy. If passed, the bill expects to create 1.9 million additional affordable units over the next decade. According to the National Low-Income Housing Coalition, there’s a national shortage of seven million affordable and available rental homes.
Created 30 years ago, the Affordable Housing Tax Credit offers developers generous tax breaks if new development will include affordable units (defined charging rent that’s roughly 30 percent of total income, based on area median income). It has been used to construct more than 3.2 million housing units, leveraging more than $190 billion in private investment.
The Affordable Housing Credit Improvement Act would stimulate construction by increasing the amount of credit used to build affordable units by 50 percent, which is estimated to create of 384,000 more homes in the next decade. The Act would also stabilize the value of the tax credit at four percent, eliminating uncertainty for developers juggling additional acquisition costs and other subsidies. It would also allow “recycling” of multifamily housing bonds, a financing mechanism that allows for the reuse of tax-exempt bonds, which would create 100,000 additional units.
The bill was introduced yesterday by Senators Maria Cantwell (D-WA), Johnny Isakson (R-GA), Ron Wyden (D-OR), and Todd Young (R-IN), and U.S. Representatives Suzan DelBene (D, WA-01), Kenny Marchant (R, TX-24), Don Beyer (D, VA-08), and Jackie Walorski (R, IN-02), representing a cross-section of states and parties.
A number of housing nonprofits, including Enterprise, issued statements in support of the legislation. Diane Yentel, president and CEO of the National Low-Income Housing Coalition, applauded the bill and its sponsors.
“If enacted, the bill would take important steps toward alleviating the growing housing affordability crisis by incentivizing developers to better serve the lowest income families—those with the greatest and clearest needs,” said Yentel in a statement. “The bill would help the Housing Credit better reach extremely low-income people, as well as underserved rural and Native American communities.”
In addition to expanding financial support for affordable housing construction, the Affordable Housing Credit Improvement Act would also change how the tax credit can be used. Alterations in who and where it would be used would specifically target at-risk populations, including veterans, low-income students, and extremely low-income Americans, and make it easier to use credits for development in Native American and rural communities. In addition, the act would stipulate that all properties using these credits conform to the Violence Against Women Act (VAWA).
“We are millions of units short of affordable housing and the result is that nearly half of all renters spend more than 30 percent of their income on rent,” said David M. Dworkin, the National Housing Conference’s president and CEO, in a statement. “This legislation is an important step towards closing the housing supply gap, but there’s much more to do.”
One of the sponsors, Washington Senator Cantwell, believes the issue will cross the aisle, which hopefully can help build a coalition around passing the act.
“We know that this challenge of moving forward on affordable housing is something that is a bipartisan issue,” the Senator said. “The [Affordable Housing] tax credit has had bipartisan support for many years in the United States Congress. We just need to put the pedal to the metal and provide more of the tax credit so we can get more affordable housing built in the United States of America.”