By Congresswoman Suzanne Bonamici
Press Release,
Congresswoman Suzanne Bonamici (D-OR), Congressman Earl Blumenauer (D-OR), and Congressman Peter DeFazio (D-OR) urged House leadership to include provisions that would improve effectiveness of the Low-Income Housing Tax Credit (LIHTC) in any end-of-year tax legislation.
The LIHTC has been used for the construction or rehabilitation of more than 3 million affordable homes nationwide since 1986, and is the largest federal program designed to incentivize more affordable housing. Currently, to access a 4 percent tax credit through the LIHTC program, 50 percent of a development must be funded with Private Activity Bonds (PABs).
The Oregon lawmakers called for reducing the proportion of PABs needed to access the 4 percent tax credit from 50 percent to 25 percent, and increasing the state allocations of PABs to mitigate the competition for bond resources. According to analysis prepared for the National Council of State Housing Agencies, this change would raise nearly $100 billion annually for the development of affordable housing.
“By lowering the PAB threshold test and increasing the PAB allocation, state and local affordable housing investments can build more homes for working families, expand access to supportive housing to better serve older Americans and people experiencing mental health crises, and maintain progress in addressing the housing crisis,” the lawmakers wrote. “We look forward to working with you to make sure that any end-of-year tax legislation unlocks these and other affordable housing tools to make housing more affordable in our communities.”
More than twenty states, including Oregon, have already reached their federally-allocated PAB cap. Without further congressional action, state and local governments and affordable housing developers are limited in their ability to finance critical new housing stock. This barrier makes building affordable housing more costly and burdensome.
“This work by Oregon’s Congressional delegation has been vital in creating new tools for building affordable housing,” said Metro Council President Lynn Peterson. “Private activity bonds help limit the amount of locally-generated money needed to build affordable housing as our nation faces an affordable housing crisis. Without this action, Metro-area taxpayers could have to double their subsidy for the affordable housing we’re building for more than 12,000 people. We call on members on all sides of the aisle to take action to reduce the 50% threshold for private activity bonds and want to express our deep appreciation to the members of the Oregon delegation who are taking a leadership role on this issue.”
“Private Activity Bond funds represent more than 30% of the financing for typical affordable housing development, but the current need for these resources in Oregon is more than double the amount of funding available in the immediate future,” said Molly Rogers, Interim Director of the Portland Housing Bureau. “This resource shortage threatens to impede our progress toward meeting the goals of our voter-approved Portland and Metro housing bond measures and delay the production of urgently needed affordable housing at this critical time. We are thankful to our Congressional delegation for leading this effort at such a critical time.”
You can read the lawmakers’ full letter to House leadership below and here.
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