On June 25, 2020, Senate Finance Committee Ranking Member Ron Wyden, D-Ore, and Senator Maria Cantwell, D-Wash introduced legislation to expand affordable housing among admist the COVID-19 pandemic and economic crisis.
The bill is known as the Emergency Affordable Housing Act
Senator Wyden describes why this legislation is needed:
“The lack of affordable housing was a national crisis before the pandemic, and this crisis has made even clearer that millions of Americans are only a missed paycheck away from not being able to pay their rent or mortgage. This country needs more affordable housing, not less. Congress can’t allow this crisis to increase homelessness and further reduce the supply of affordable housing,” Senator Wyden said. “Our bill includes common sense policies that would help preserve existing affordable housing and create new affordable housing by ensuring the continuation of projects in the pipeline.”
Expansion of Low Income Housing Tax Credit
Here’s how the bill expands the LIHTC:
- Expands the 9% credit for new constructions by 50%
- The bill would temporarily allow more 4% credits to be paired with bond-financed affordable housing projects.
Increase in Low Income Housing Tax Credit for housing families most in need
The bill provides:
- a 50% larger credit for projects housing low-income families with incomes below 30% of the median area income.
Keep developers and operators afloat
As a result of the pandemic, construction as halted and leasing-up of finished buildings has been delayed. LIHTC developers are suffering economic losses.
To keep developers afloat and prevent them from walking away from paying their debts or completing their projects, the bill:
- extends key compliance deadline
- accelerates the entire LIHTC credit into the first year
- expands the 4% housing credit for current deals
The bill repeals the “qualified contract” option that allows LIHTC owners to convert properties to market rate after just 15 years.
It also prohibits the consideration of local support or opposition, or local government contributions in deciding where to build affordable housing.