Senate Finance Committee Releases Modified Tax Reform Bill; House Prepares for Floor Tax Reform A…

In another important victory for affordable housing industry, the Modified Mark includes several provisions of the Affordable Housing Credit Improvement Act, S. 548, sponsored by the Chairman and Senator Maria Cantwell (D-WA). They would:

• Allow state allocating agencies to determine a reasonable reconstruction or replacement period after a casualty loss;
• Replace the right of first refusal with a purchase option to help project sponsors ensure long-term affordability of a property after an investor exit;
• Modify the preference for housing locating in a Qualified Census Tract that contributes to a concerted community revitalization plan to clarify that the state allocating agency—not the federal government—has the authority to set parameters for what constitutes a concerted community revitalization plan in its state and set broad criteria the state should consider in its determination of such plans;
• Prohibit states from requiring or providing points for local approval or local contributions as part of project selection;
• Encourage the development of affordable housing in Native American communities by adding a selection criteria requiring states to consider the affordable housing needs of individuals in a state who are members of Indian tribes; and
• Rename the program the "Affordable Housing Tax Credit."

The Modified Mark does not include changes to the Housing Credit to maintain Credit production in a lower corporate tax rate environment. According to a Novogradac & Company analysis, lowering the corporate rate to 20 percent without corresponding modifications to the Housing Credit would reduce production by approximately 15 percent.

On the House side, Speaker Paul Ryan (R-WI) has moved up floor consideration of House tax reform legislation, H.R. 1, to begin today. He had originally intended to begin floor consideration of the bill tomorrow, but accelerated the schedule to accommodate a meeting between the House Republican Conference and President Trump, now scheduled for tomorrow morning.

In order to advance floor consideration of the bill, the House Rules Committee met last night instead of today as previously scheduled to establish a rule for debate on the bill. The Rules Committee adopted a closed rule for debate, which prohibits amendments from being offered on the floor.

During the Rules Committee meeting, Representative Randy Hultgren (R-IL), co-chair of the Municipal Finance Caucus, testified in support of his amendment to restore PABs. He told the Committee that while there is much he likes in the bill, he is concerned that not enough consideration has been given to the treatment of tax financing tools used by state and local governments, including PABs, and that private entities use PABs to contribute to the public good. He then named affordable housing as one of two sectors relying on PABs about which he is most troubled, citing NCSHA data on the loss of production under the Housing Credit and a 4 percent Housing Credit property providing supportive housing in his district as an example of the types of properties that would not be built if PABs are eliminated.