Affordable Housing Legislation Strengthened in Light of Increased Need
In just these past few months we have seen huge gains for affordable housing, which will have a tremendous impact at a time when they are so critically needed as we recover from the pandemic. In addition to authorizing nearly $70 billion in emergency housing resources, Congress set a minimum 4 percent Low-Income Housing Tax Credit (Housing Credit) rate at the end of 2020 – a longstanding priority for the affordable housing community.
The 4 percent rate is already having a clear impact, making possible developments that simply could not have moved forward with the rate as low as it was – close to 3.07 percent at its lowest, as a result of cuts to federal borrowing rates. Now that the 4 percent Housing Credit is more fully utilized, the private activity bonds that states use to access the 4 percent credits are also now in higher demand. Recognizing the need for greater access to private activity bonds, we are broadening our affordable housing agenda this year.
The Affordable Housing Credit Improvement Act (AHCIA), which was recently introduced in both the House and Senate with bipartisan support, includes roughly two dozen provisions to expand and strengthen the Housing Credit for which we have been advocating for years, as well as several key new provisions. As with previous versions of the legislation, the new AHCIA would expand the annual Housing Credit allocation by 50 percent, but this year’s version would phase the increase in over two years instead of the previous five. A new provision this year would also lower the 50 percent bond financing threshold required to access 4 percent credits down to 25 percent, to allow states to double the affordable housing they can produce with their private activity bond volume cap. Taken together, the proposals in the AHCIA would finance the development of more than 2 million additional affordable homes over the next decade than otherwise possible.
Two-thirds of the Pennsylvania congressional delegation co-sponsored the AHCIA in the last Congress, and we look forward to partnering with the Housing Alliance of Pennsylvania to rebuild support for this important legislation. This year we have a very real opportunity to meaningfully increase investments in affordable housing as part of infrastructure legislation, but it is incumbent on our advocacy to move these proposals across the finish line, and we hope you’ll join us. Learn more about the AHCIA here.