Legislation was introduced today in the House and Senate that will permanently fix the 9% credit rate and the 4% credit rate used for acquisition.
Under the Housing and Economic Recovery Act of 2008, the 9% credit rate was fixed at 9% through 2013. Without this provision, the rates float based on the cost of borrowing for the federal government. At today’s low interest rates, the rate on the 70 percent value credit would otherwise be only 7.47%. Fixing the credit at no less than 9% allows housing finance agencies to put more equity into a project. With sources of gap financing — such as HOME funds — declining, the additional equity invested into the project will become more critical. Fixing the 4% credit rate for the 30% present value credit used for acquisition will provide the same benefits.
In the House, this legislation was introduced by Representatives Pat Tiberi (R-OH) and Richie Neal (D-MA). Rep. Tiberi is the Chairman of the House Ways and Means Subcommittee on Select Revenue Measures, while Rep. Neal is the ranking member, or top democrat. Joining Reps. Tiberi and Neal as original cosponsors are: Vern Buchanan (R-FL); Emmanuel Cleaver (D-MO); Joseph Crowley (D-NY), Jim Gerlach (R-PA); Bill Pascrell (D-NJ); Charles Rangel (D-NY); and Lee Terry (R-NE). The bill carries the number H.R. 3661.
In the Senate, Senator Maria Cantwell (D-WA) and Olympia Snowe (R-ME) introduced S. 1989, which is identical to the House bill. Senators Cantwell and Snowe are both members of the Senate Finance Committee. Joining them as original cosponsors are: Jeff Bingaman (D-NM); Scott Brown (R-MA); Benjamin Cardin (D-MD); Susan Collins (R-ME); Mike Crapo (R-ID); John Kerry (D-MA); Robert Menendez (D-NJ); Bill Nelson (D-FL); and Bernard Sanders (I-VT).
NAHB is particular pleased by the strong bipartisan support, particularly from members of the key tax writing committees in the House and Senate. NAHB has been working very closely with a large coalition representing all aspects of the Low Income House Tax Credit community to build support for this bill. Not only does this legislation address an important issue, it also provides the LIHTC community with an opportunity to engage Congress on the credit. As part of our broader tax reform strategy, NAHB and our coalition partners will use this bill to increase awareness of the program as a whole. To that end, NAHB will be reaching out to the Housing Credit Group to encourage all members to meet with their House and Senate members about this legislation. As part of that effort, NAHB will develop a toolkit accessible to members of the HCG to facilitate that outreach. More information on this will follow.
For more information, contact J.P. Delmore at 800-368-5242 x8412.