- Created: Wednesday, 15 November 2017 08:35
- Written by Laura Proescholdt
Federal tax reform is moving ahead at full steam. Here’s a rundown of how the House and Senate bills impact affordable housing and community development — and what happens next.
This Thursday, the U.S. House of Representatives plans to vote on H.R. 1, the Tax Cuts and Jobs Act.
This bill would deal a major blow to affordable housing development — and therefore the health, wealth, and stability of communities across the country — if passed in its current form. Over the next 10 years alone, H.R. 1 would eliminate nearly 1 million affordable rental homes, over 1 million jobs, and nearly $100 billion in business income nationwide, according to analysis by Novogradac & Co.
The House bill undermines affordable housing and community development by:
- Eliminating tax exempt private activity bonds, which have been essential to the creation of more than 15,000 units of affordable housing in Minnesota over the past decade. If the bill passes Thursday, the 779 units in Minnesota awarded funding this October are at risk of not being constructed or rehabilitated — obliterating $140 million in development activity.
- Directing savings from sensible changes to the mortgage interest deduction to billionaires and corporations rather than investing in affordable homes for low and moderate income Americans.
- Scrapping the Historic Tax Credit, which has renovated more than 40,000 structures and leveraged $117 billion in private investment over the past 25 years.
- Reducing the corporate tax rate without modifications to the Housing Tax Credit, which will negatively impact the value of the 9% Low Income Housing Tax Credit (LIHTC). Novogradac & Co. estimates the net result will be $1.2 billion fewer dollars in equity annually.
- Instituting an alternative inflation measure that will decrease inflation adjustments in LIHTC allocations and, over 10 years, result in the loss of 8,200 affordable rental homes, according to Novogradac & Co. analysis.