Policy Pulse typically comes out once a quarter, but with multiple major developments at the federal level that could have significant impacts on affordable housing and community development, Cinnaire wanted to share some brief updates on what we know and what to watch in the coming weeks.
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Friday, January 19, is the first of two deadlines for Congress to avoid a shutdown of federal agencies.
Four of the annual funding bills, including the bill that funds the Department of Housing and Urban Development, face the Friday deadline with the remaining eight bills slated to expire on February 2nd. House Speaker Mike Johnson (R-LA) (left) recently reached an agreement with Senate Majority Leader Chuck Schumer (D-NY) on topline budget numbers, paving the path for the Appropriations Committees to write spending bills. However, without enough time to pass full spending bills ahead of these deadlines, Speaker Johnson and Majority Leader Schumer are working to pass a stopgap spending bill. The stopgap would extend the two deadlines to March 1 and March 8.
With an agreement on topline spending numbers and a stopgap in the works, a partial government shutdown is not expected, although it could take time for the stopgap to work its way through the legislative process this week.
We will be monitoring discussions in Congress on spending in the coming weeks. While the Schumer-Johnson agreement makes the appropriations process possible, Speaker Johnson faces a familiar dynamic in the House, including an obstreperous far-right Freedom Caucus, a very narrow majority in the House, and not much time on the legislative calendar before the next deadlines hit
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On Tuesday, Senate Finance Committee Chairman Ron Wyden (D-OR) (right) and House Ways & Means Committee Chairman Jason Smith (R-MO) announced an agreement on a bipartisan tax package, which includes resources for the Low-Income Housing Tax Credit (LIHTC) program. While inclusion in the tax agreement is an important and necessary first step, it is far from a done deal. The path forward for enactment of the package remains uncertain, with potential pitfalls ahead in a notably dysfunctional Congress.
That said, the inclusion of LIHTC in the tax package is a major achievement, especially given the constraints facing tax negotiators and competing priorities for limited resources. If enacted, this legislation would mean more resources helping us achieve our mission and create desperately needed affordable homes. The LIHTC provisions included in the agreement are estimated to finance over 200,000 additional affordable homes over the next ten years than otherwise possible, according to Novogradac.
The agreement includes our top two Housing Credit production priorities:
- It would restore the 12.5% allocation increase for 2023 – 2025. This allocation increase was initially enacted in 2018 but expired in 2021. The provision in this agreement would not extend the 12.5% retroactively for 2022, but would restore it retroactively for 2023 and keep it in place for the next two years.
- It lowers the 50% bond financing test to 30% for PAB allocations made in 2024 – 2025.
A full summary of the agreement from the Affordable Housing Tax Credit Coalition (AHTCC) can be found here. In addition to the provisions below, the agreement includes an extension of 100% bonus depreciation.
About Cinnaire
Cinnaire is a non-profit financial partner that supports community and economic revitalization initiatives through creative investments, loans, and development services. Since 1993, Cinnaire has invested $4.7 billion to develop 811 housing communities in 10 states, providing 49,700 affordable apartment homes for more than 100,000 individuals and families, and has provided community development loans to support the creation/retention of more than 187,000 square feet of commercial, mixed-use, and community space. In its mission to change lives and transform neighborhoods into thriving communities, Cinnaire has helped to create or retain over 76,000 jobs and spurt $7.9 billion in economic impact. www.cinnaire.com
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