Federal Tax Credit Legislation Recognizes Housing Crisis And Provides Platform For Additional Reform – Real Estate

Real Estate Partners Glenn Miller and Kenneth Lore and Associate
Charlie Metzger authored an article for Tax Credit Advisor
about federal tax credit legislation that aims to address
today’s affordable housing crisis in major cities, suburbs and
rural areas.

In the article, the authors highlight key components of the Tax
Relief for American Families and Workers Act (Act), passed by the
US House of Representatives on January 31 against the backdrop of
rising rents and a lack of housing nationwide, that are crucial to
the production and preservation of affordable housing units. Two
notable provisions include:

1. A temporary reduction for 2024 and 2025 of the Private Activity
   Bond (PAB) financing threshold, reducing the so-called “50
   Percent Test” (the requirement that at least 50 percent of a
   project’s qualified development costs be financed with PABs) to
   30 percent; and




2. The restoration of an annual increase in the volume of 9
   percent LIHTC over and above the base allocation of 9 percent LIHTC
   already provided to states by the federal government.

The authors also share examples of policy reforms that state and
local governments “can pursue to build on the Act,”
including adjusting zoning laws to allow denser development,
modernizing environmental laws and others that increase housing
development costs, and supplying incentives structured to increase
housing production, such as local government support and
low-interest financing.

If the Act clears the Senate and is eventually signed into law,
the authors emphasize that it is “not a complete
solution” as it primarily focuses on increasing the supply of
affordable units rather than addressing persistently high rents.
However, if paired with policy reforms enacted at the state and
local levels “with an emphasis on spurring additional housing
production across all income levels,” there is potential to
see greater levels of affordability.

“Federal Tax Credit Legislation Recognizes Housing
Crisis and Provides Platform for Additional Reform,”
Tax Credit Advisor, April 1, 2024

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