Tax Reform Bill Signed Into Law, Preserves Critical Affordable Housing Programs
Today President Trump signed the Tax Cuts and Jobs Act into law after it passed both chambers of Congress earlier this week. The House approved the bill by a vote of 227 – 203, with 12 Republicans and all Democrats voting against it; the Senate approved the bill by a party-line vote of 51 – 48.
The Tax Cuts and Jobs Act retains all core affordable housing and community development programs: the Low-Income Housing Tax Credit (Housing Credit); private activity bonds, including multifamily Housing Bonds; the New Markets Tax Credit (NMTC); and the historic rehabilitation tax credit. The bill also lowers the top corporate tax rate from 35 to 21 percent, effective January 1, 2018.
A new analysis by Novogradac and Co. estimates that the final version of the tax reform bill would reduce affordable rental housing production by nearly 235,000 homes over ten years, largely as a result of the lower corporate tax rate. A new base erosion and anti-abuse tax will also affect certain investors’ ability to use the Housing Credit and other credits. Read more about the final version of the Tax Cuts and Jobs Act in Enterprise’s blog post.
In a statement, Enterprise President and CEO Terri Ludwig thanked members of Congress who fought to retain the Housing Credit, Housing Bonds and NMTC, and adds that Enterprise will “continue advocating for improvements to these critical programs, including strengthening and expanding the Housing Credit, enacting the Affordable Housing Credit Improvement Act, and permanently extending the NMTC.” Enterprise’s Public Policy Director Emily Cadik also noted in an article in Affordable Housing Finance that “the industry will now seek modifications to the Housing Credit to ensure we continue to produce at least as much affordable housing as we did prior to tax reform,” emphasizing the importance of advancing the Affordable Housing Credit Improvement Act, which will be vital in the new tax system.
Congress Passes Short-Term Spending Bill, House Approves Disaster Recovery Funding
Yesterday, Congress passed stopgap legislation to keep the government funded through January 19. The legislation also includes a short-term funding fix for the Children’s Health Insurance Program and a PAYGO waiver to prevent the tax bill from triggering $150 billion a year in cuts to Medicare and other federal programs.
Before leaving for the holidays, the House also approved an $81 billion disaster recovery package. The bill, which is nearly double the White House’s $44 billion request, would provide $27.6 billion for FEMA, $26.1 billion for HUD’s Community Development Block Grants-Disaster Recovery (CDBG-DR) program, $2.9 billion for hurricane education recovery to help displaced students return to school, $1.6 billion for the Small Business Administration’s disaster loan program and $600 million for economic development grants. The House disaster aid package also includes $10 million for technical assistance and capacity building to help local governments and nonprofit organizations administer federal disaster recovery resources more effectively. However, the Senate is not expected to consider its version of the legislation before the new year.